Japan’s factory activity falls on US tariff worries, PMI shows

TOKYO – Japan’s factory activity shrank for the 10th straight month in April on weaker overseas demand and worsening concerns about US tariffs, a private-sector survey showed on May 1.

The final au Jibun Bank Japan manufacturing purchasing managers’ index (PMI) edged up to 48.7 in April from 48.4 in March, indicating a modest contraction in business conditions.

The index was slightly higher than the 48.5 in the flash reading, while it stayed below the 50 threshold that separates growth from contraction for the 10th straight month.

“Business conditions continued to weaken across Japan’s manufacturing industry in April,” said Ms Annabel Fiddes, economics associate director at S&P Global Market Intelligence, which compiled the survey.

The index of new orders shrank at the fastest pace since February 2024. Firms in the survey mentioned subdued customer spending and lower demand for products such as semiconductors and machinery equipment.

Manufacturers also cited lower demand among key export markets such as China, Europe and the United States, which sent the index of new export orders falling at the fastest pace since October 2024.

US President Donald Trump’s tariffs on a wide range of products including vehicles, Japan’s key export, have fanned concerns about global trade.

Japan’s top trade negotiator Ryosei Akazawa, who will hold a second round of talks with Washington this week, is seeking full removal of US tariffs.

Business confidence weakened to its lowest level since June 2020 on concerns about global prospects and tariffs.

“Firms are likely to struggle to see a recovery in conditions unless there is a noticeable improvement in demand both at home and overseas,” Ms Fiddes said.

Input costs rose at the softest pace in a year, but they remained a burden on firms amid rising prices of various factors such as transport, fuel, labour and raw materials. REUTERS