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Japan's Business Activity Growth Accelerates in August on Manufacturing Surge, S&P Flash PMI Shows

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Japan's Business Activity Growth Accelerates in August on Manufacturing Surge, S&P Flash PMI Shows

Japan's business activity expanded further in August, driven by higher new orders across both the manufacturing and services sectors, preliminary estimates from S&P Global showed Friday.

The headline seasonally adjusted S&P Global Flash Japan PMI Composite Output Index rose to 53.4 in August from 52.7 in July, marking the strongest rate of growth since February.

The Flash Japan Services PMI Business Activity Index climbed to 52.3 from 51.2 the previous month. Meanwhile, the Flash Japan Manufacturing PMI increased to 55.1 from 54.5, matching the market consensus forecast compiled by Investing.com.

"While we saw growth momentum pick up across both manufacturing and service sectors, factories continued to lead growth, registering sharp increases in both production and new orders," Annabel Fiddes, S&P Global Market Intelligence's economics associate director, said.

Demand for semiconductors and artificial intelligence-related technologies was a major factor, driving manufacturers' sales to their steepest increase in more than 8.5 years, Fiddes added. In the services sector, new business rose at the second-strongest rate since February.

Rising workloads prompted firms to expand payrolls, with the rate of job creation outpacing the historical average. While cost inflation remained sharp, price pressures eased during the month, according to S&P Global.

Overall business sentiment improved, though manufacturers were more optimistic than services firms, citing expectations for higher sales and stronger market conditions in the months ahead.

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