Japan’s factory activity continues to slow amid concerns over US tariffs

Japan’s manufacturing sector has now contracted for ten consecutive months in April, with business confidence plunging to a five-year low. The drop is largely attributed to concerns over US President Donald Trump’s tariff policies, according to Reuters.

Japan’s manufacturing purchasing managers’ index (PMI) by au Jibun Bank came in at 48.5 in April, slightly up from 48.4 in March. The figure remains below the 50.0 threshold that separates expansion from contraction.

Meanwhile, Japan’s services PMI rose from 50.0 in March to 52.2 in April, boosted by strong customer demand that drove the strongest increase in sales in three months.

According to Annabel Fiddes from S&P Global Market Intelligence, global economic uncertainty, trade disputes, labor shortages, and an aging population continue to weigh on business confidence in Japan. Meanwhile, Trump announced some progress in tariff negotiations with Tokyo.

The composite PMI index, which tracks business activity in both the manufacturing and services sectors, swung back to growth in April, reaching 51.1 from 48.9 in March.