Recent preliminary data from au Jibun Bank reveals that Japanese business activity contracted in March, marking the first decline in five months. The manufacturing Purchasing Managers’ Index (PMI) fell to 48.3 in March from 49.0 in February—indicating contraction as the reading dipped below 50. This decline, weaker than expectations of 49.2, was driven primarily by softer overseas demand that impacted new work orders in manufacturing.
In addition to the manufacturing slowdown, Japan’s services sector also contracted for the first time since mid-2024, with the services PMI falling from 53.7 in February to 49.5 in March. The decline in services activity was largely attributed to waning domestic demand amid rising input costs and persistent inflation pressures, which have kept inflation above the Bank of Japan’s target.
The overall composite PMI, which combines manufacturing and services, dropped to 48.5 in March from 52.0 in February—the first decline in five months. This contraction reflects the cooling of the Japanese economy, influenced by both a decline in private spending from last year’s highs and uncertainties stemming from U.S. trade policies, particularly amid the possibility of additional tariffs under President Donald Trump.
Monitoring Economic Sentiment with FMP APIs
To further analyze these macro trends and assess their impact on market volatility, investors can utilize these two Financial Modeling Prep APIs:
? Forex Daily APITrack the performance of the Japanese yen and other key currencies to gauge the influence of domestic economic conditions and global trade dynamics.
? Technical (StdDev) APIMonitor volatility and momentum trends in Japanese equities, which can provide insights into how market participants are reacting to the latest PMI data and economic indicators.
Conclusion
Japan’s recent contraction in both manufacturing and services activity underscores the challenges the economy faces amid soft overseas demand, persistent inflation, and uncertain trade policies. As private spending cools and macro pressures mount, investors should keep a close watch on currency movements and market volatility. Using tools like the Forex Daily and Technical (StdDev) APIs can offer valuable insights into how these economic shifts may influence the broader market sentiment in Japan and beyond.
