Japan's manufacturing activity expanded at a slower pace in May but remained in growth territory, while the services sector stalled due to rising costs from Middle East supply disruptions.
The flash Japan manufacturing PMI slipped to 54.5 from 55.1 in April, matching market forecasts. The reading stayed well above the 50 threshold that separates growth from contraction.
Production growth was partly supported by stockpiling amid concerns over supply shortages caused by the Middle East conflict. In contrast, the services PMI fell to 50.0 from 51.0, indicating stagnation after 13 months of expansion.
The composite PMI dropped to 51.1 from 52.2, the slowest pace of private-sector growth in five months. Input costs rose at the fastest pace since late 2022, pushing selling prices to the highest in nearly 19 years.
