Japan

Japan’s Economy Expands 0.5% in First Quarter, Matching Expectations

Japan’s economy grew 0.5% quarter-over-quarter in the first quarter of 2026, matching market expectations and accelerating from the 0.3% growth recorded in the previous quarter.
Japan Services PMI fell to 50.0 in May, matching expectations but down from 51.0 previously.
Japan’s corporate investment activity stalled sharply in the first quarter, raising concerns about the strength of domestic economic momentum. Capital spending was unchanged from a year earlier, coming in at 0.0%, well below market expectations for 4.1% growth and down significantly from the previous quarter’s 6.5% increase.
Tokyo Core CPI inflation slowed to 1.3% year over year in May, missing expectations of 1.5% and easing from the previous 1.5% reading.
Japan’s BoJ Core CPI rose 2.8% year over year, clearly above the 1.7% forecast and higher than the previous 2.5%.
Japan’s inflation pressures continued to ease in April, with National Core CPI slowing to 1.4% year-over-year from 1.8%, coming in below expectations of 1.7%. Meanwhile, monthly CPI rose just 0.1%, down from 0.4% in the previous month.
Japan’s S&P Global Services PMI fell to 50.0 in May from 51.0 in April, signaling a slowdown in growth across the services sector.
Japan posted a trade surplus of ¥301.9 billion in April, sharply beating expectations for a ¥29.7 billion deficit. However, the surplus was still significantly lower than the previous month’s ¥643.0 billion surplus, indicating that while trade performance remained positive, momentum weakened compared to March.
Japan Industrial Production Decline Eases in March

Japan’s industrial production fell 0.4% month-over-month in March, outperforming market expectations for a 0.5% decline and showing a significant improvement from February’s sharp 2.0% contraction.
Japan’s Economy Beats Forecasts in Q1

Japan’s economy grew faster than expected in the first quarter, signaling stronger momentum despite global trade uncertainty. GDP expanded 0.5% quarter-on-quarter, above forecasts of 0.4% and accelerating from 0.2% in the previous quarter.

On an annualized basis, GDP rose 2.1%, also beating expectations of 1.7% and improving sharply from the prior 0.8% reading.
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