Capital Economics: Japan's PMI supports the Bank of Japan in resuming rate hikes in October.

GateUser-6433627c · 2025-06-23T07:26:24+00:00

Japan's composite PMI rose to 51.4 in June, indicating a slight rise in the manufacturing and service sectors, supporting expectations for the Central Bank of Japan to resume interest rate hikes in October. The growth in consumer spending has also increased the likelihood of rate hikes.

GateUser-6433627c

2025-06-23 07:26:24

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Japan’s latest PMI data supports Capital Economics’ view that the Bank of Japan may raise interest rates sooner rather than later. Japan’s composite PMI rose to a four-month high of 51.4 in June. Both the manufacturing and services PMIs edged higher in June. Capital Economics macroeconomist Abhijit Surya writes that the manufacturing output index points to a renewed acceleration in industrial production, while new export orders point to a modest increase in volumes. The services PMI is well above historical averages, in line with the sizable growth in consumer spending. All in all, the BOJ is expected to have a reason to raise rates in October, rather than early next year, as many expected. ( gold ten )

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