The S&P Global Japan Manufacturing PMI inched down to 54.7 in July 2026 from 54.8 in the previous month, but surpassed market expectations of 54.5, preliminary estimates showed.
It was the seventh straight month of expansion in factory activity, supported by faster increases in output, while new orders grew at the fastest pace in over five years.
Employment continued to rise, while purchasing activity increased at the fastest pace in more than four years, feeding through to higher stocks of purchases.
Stocks of finished goods also rose, the first increase in two years.
On the price front, input price inflation eased, while output price inflation slowed to a three-month low.
Finally, business sentiment improved to its highest level in four months, supported by hopes of new product launches and stronger demand, notably in the AI and semiconductor industries.