Japan Factory PMI Hits 12-Year Quarterly High on AI Demand

Japan's manufacturing sector extended its expansion into a sixth consecutive month in June, with the S&P Global Manufacturing PMI rising to 54.8 from 54.5. The reading capped the strongest quarterly performance since the first quarter of 2014, the survey showed.

Production growth remained robust. New orders increased at the fastest pace in nearly four and a half years, supported by demand for AI-related technology and semiconductors, S&P Global said. The expansion also reflected precautionary stockpiling tied to the Middle East conflict, the survey found.

Supply chains continued to face disruptions. Shipping delays and supplier shortages persisted, contributing to some of the strongest inflationary pressures recorded since the survey began in 2001. Input costs and selling prices both rose rapidly again in June.

S&P Global noted that the current pace of growth may prove difficult to sustain into the second half of the year. As geopolitical tensions ease and stockpiling activity fades, demand could normalize while elevated costs continue to pressure client spending. The June PMI data left the manufacturing sector with its strongest quarter in over a decade. The path ahead depends on whether underlying demand can hold up as temporary supply-driven support recedes.