Japan PMI Stays Above 50 as China’s Official Gauge Slips Below It

Japan’s factory survey stayed in expansion in October while China’s official gauge fell below 50, as the International Monetary Fund (IMF) highlighted Asia’s exposure to a possible pullback in AI investment.

Japan’s flash manufacturing purchasing managers’ index (PMI) eased to 53.3 from 54.1 in September, its lowest reading in seven months. A reading above 50 signals improving conditions from the previous month, so the survey remained in expansion territory. It also indicated that manufacturing output continued to grow, with AI-related demand supporting the sector.

China’s official manufacturing PMI fell 0.8 percentage point to 49.3% from 50.1% in September. A reading below 50 signals worsening conditions in the survey. The October result therefore moved the gauge from just above that threshold to below it.

The Japan and China figures come from separate surveys and are not directly interchangeable. PMIs indicate the direction of surveyed business conditions; they do not measure the total volume of goods factories produce. The readings show different survey signals in the two countries, but do not establish a broader regional trend or explain what caused the changes.

The IMF said a reassessment of profitability at AI-related firms could trigger a sharp correction in investment and financial markets. It identified Asia as particularly exposed because of the region’s role in the AI production chain. The IMF’s warning describes a possible risk; the October factory readings do not show that AI demand has already reversed or caused Japan’s slower PMI reading.

AI-related demand was still supporting trade earlier this year. “Strong demand for AI infrastructure has seen semiconductor demand surge, as has investment in data centers,” Krishna Srinivasan, director of the IMF’s Asia and Pacific Department, said at an Oct. 14 briefing.

The IMF projected Asia’s growth would moderate from 5% in 2025 to 4.8% in 2026 and 4.4% in 2027. Those are regional growth forecasts, not estimates of factory output.