Japan's Manufacturing Sector Sees Strongest Growth Over 3 Years

Japan's manufacturing industry's health has recovered, with the S&P Global Japan Manufacturing PMI rising to 51.5 in January 2026, up from 50.0 in December. This marks the strongest improvement in operating conditions since August 2022, led by increased output, new orders, and employment. New export business also expanded for the first time since February 2022, supported by stronger demand from major markets like the U.S. and Taiwan. Despite the positive growth, inflation remains a concern, with input costs rising at the quickest pace in nearly a year, due to higher labour and raw material costs, as well as a weaker yen. As a result, factory gate prices increased at an accelerated pace, the steepest seen in over a year-and-a-half. Companies remain optimistic about future growth, citing stronger global demand for semiconductors, autos and new product launches.