Fashion
Japan manufacturing sector rebounds in Jan, strongest since Aug 2022
The rebound was driven by a return to growth in new orders, which expanded for the first time since May 2023 and at the fastest pace in nearly four years. Firms cited stronger customer demand and new product launches as key drivers of improved sales. New export orders also increased for the first time since February 2022, supported by firmer demand from major markets such as the United States and Taiwan, S&P Global said in a press release.
Japan’s manufacturing sector returned to growth in January 2026, with the S&P Global PMI rising to 51.5, its strongest reading since August 2022.
New orders and exports expanded for the first time in years, lifting output, employment and purchasing activity.
However, rising input costs and selling prices signalled intensifying inflationary pressures despite improving demand conditions.
Improved demand conditions translated into higher factory output, with production rising for the first time since June 2025. Although the pace of expansion remained modest, it was the strongest since April 2022 and exceeded the long-run average.
Rising workloads also placed fresh pressure on capacity. Backlogs of work increased for the first time in three-and-a-half years, prompting manufacturers to step up hiring. Employment rose at the fastest rate since September 2022, as companies sought to rebuild capacity and prepare for further increases in output.
Purchasing activity also picked up, reflecting more positive expectations for the year ahead. Business conditions improved across all three monitored manufacturing sub-sectors, led by investment goods producers.
However, the survey highlighted growing inflationary pressures. Input costs rose at the quickest pace in nearly a year, partly reflecting the recent weakening of the yen, while selling price inflation climbed to a 19-month high, as firms passed higher costs on to customers.
“Japan’s manufacturing industry propelled itself back into growth territory at the start of 2026, with firms signalling the strongest upturns in output and new orders for nearly four years. Furthermore, new export business expanded for the first time since the start of 2022, to suggest a broad-based improvement in demand conditions,” said Annabel Fiddes, economics associate director at S&P. “More positive news was seen for employment, which rose to the greatest extent since September 2022, as firms sought to build capacity. Combined with a fresh rise in purchasing activity and upbeat expectations for the year ahead, the data suggest the sector is gearing up for further increases in output in the months ahead.”
“However, inflation remained a key area of concern for businesses. Input costs rose at the quickest pace in nearly a year, partly due to the recent weakening of the yen, leading to a sharper rise in selling prices. It will be important to monitor the prices data to see if these inflationary pressures intensify, as this could impact customer demand and firms’ own investment decisions,” added Fiddes.
Fibre2Fashion News Desk (SG)