Japan's composite PMI rises to 50.8, driven by services growth

The au Jibun Bank Japan Flash Composite PMI rose to 50.8 in December 2024, up from 50.1 in November, marking the second consecutive month of growth in private sector activity and the strongest pace since September.

Japan's composite PMI rises to 50.8, driven by services growth

A faster service sector expansion primarily drove this improvement, while manufacturing output remained weak, contracting for the fourth consecutive month. New order growth accelerated, with services seeing the most rapid increase in new business in four months. Employment continued to rise, and backlogs of work decreased after an uptick in November. However, foreign sales remained weak, declining at a faster rate.

Japan inflation climbs as input prices rise, business sentiment weakens

Regarding inflation, input prices rose faster in four months, partly due to the yen's depreciation affecting import costs. As a result, firms increased selling prices quickly, marking the highest inflation level since May. Finally, business sentiment softened to its second-lowest level in over three years, driven by concerns over labor shortages and the impact of high inflation on economic activity.