Financial News: Japan Private Sector Growth Accelerates

Japan Private Sector Growth Accelerates

06/23/2026 - 02:00:00 (RTTNews)

(RTTNews) - Japan's private sector activity grew the most in three months in June, underpinned by faster increase in manufacturing output and a renewed upturn in services activity, flash survey data compiled by S&P Global showed Tuesday.

The flash composite output index rose to 52.5 in May from 51.1 in the previous month. A score above 50.0 indicates expansion.

The private sector activity grew for the fifteenth consecutive month and the pace of growth was the best since March.

Manufacturers signaled the second fastest increase in output since January 2022. Meanwhile, service sector activity grew after stagnating for the first time in over a year in May.

The services Purchasing Managers' Index advanced to 51.8 from 50.0 in the previous month. At the same time, the factory PMI climbed to 54.9 from 54.5 a month ago.

While the survey suggests a strong second quarter performance overall, it is important to note that the current period of growth is partly being driven by stock-piling efforts amid the war in the Middle East, and these efforts are likely to fade in the months ahead as warehouses fill and cost pressures bite, S&P Global Market Intelligence Economics Associate Director Annabel Fiddes said.

There were steeper increases in new orders across manufacturing and service sectors. Manufacturers reported the quickest upturn in sales since January 2022, which was partly linked to stock building efforts among clients due to fears of supply chain disruptions and concerns over future price hikes amid the war in the Middle East.

Input cost inflation increased the most since July 2022 as the Iran war pushed up energy prices. Consequently, companies raised their output charges, while the pace of inflation eased only slightly from May's survey record.

Firms hired additional staff in response to the rise in new work and outstanding business. A marginal upturn in workforce numbers at services firms contrasted with the steepest increase in manufacturing payrolls for more than eight years in June.

Although businesses expect output to be higher than current levels in one year's time, the level of positive sentiment dropped from May.

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