Japan’s May PMIs show slowing growth and record input price increases, increasing chances of a June BoJ rate hike.
Japan’s May flash Purchasing Managers’ Index (PMI) data reveals fading economic momentum, with manufacturing growth slowing and services stagnating after over a year of expansion. Input prices surged at the fastest pace since 2022, while firms raised selling prices at a record rate, though still below cost inflation, squeezing margins and raising recovery risks.
Bank of Japan (BoJ) policymaker Koeda indicated a potential rate hike as early as the June 15-16 meeting if cost pressures and growth persist. April’s nationwide CPI data, due overnight, is expected to show headline inflation easing to below March’s 1.8%, partly due to government subsidies shielding consumers from higher oil prices.
Analysts note that greater stability in energy markets could further bolster near-term BoJ rate hike prospects, contrasting with other central banks’ policy outlooks.