Japan’s manufacturing sector expanded at the fastest pace in more than eight years in August, as robust demand for semiconductors and artificial intelligence-related products boosted new orders and exports.
The au Jibun Bank flash manufacturing purchasing managers’ index (PMI) climbed to 55.1 from 54.5 in July, exceeding the 50 threshold that separates growth from contraction. The reading marked the strongest expansion since January 2018, according to data published on Friday.
New orders rose at the quickest pace since January 2018, while export orders increased at the fastest rate since the start of that year. Manufacturers attributed the surge to strong pipelines of semiconductor- and AI-related work, signaling sustained demand in high-tech sectors.
The services PMI also strengthened, rising to 52.3 from 51.2, indicating renewed expansion in business activity. The composite PMI, which combines manufacturing and services, increased to 53.4 from 52.7, the fastest growth in six months.
Input buying continued to rise as production requirements increased, and employment growth remained solid. Cost pressures eased to a five-month low but remained elevated, with firms citing higher raw-material, fuel, and energy prices, supply chain disruptions linked to the Middle East conflict, and the impact of a weak yen.
The USD/JPY exchange rate stood at 158.34 on August 20, up 0.10% from the previous session.
The data underscores Japan’s resilience in high-value manufacturing, particularly in electronics and AI-enabled industries, even as broader cost pressures persist.
