Japan’s Growth Slows as Services Stall Despite Manufacturing Boom

Japan’s private sector has now grown for 13 straight months, but momentum weakened in April 2026 as service activity slowed. The flash composite PMI fell to 52.4 from 53.0 in March, marking the softest growth in four months, though still above the 50 mark that signals expansion. Services activity dropped to 51.2 from 53.4, its slowest rise in 11 months, while manufacturing surged, with PMI at 54.9 and output index at 55.4, its strongest in over 12 years. Rising output was driven by fears of supply shortages linked to the Middle East conflict. Costs climbed sharply, pushing selling prices to record highs. Export growth eased, and confidence fell to its lowest since August 2020. Employment rose modestly, but backlogs increased, showing ongoing pressure on capacity.