A private-sector survey found on Friday that weak domestic and international demand is hurting sales and output, leading to Japan’s factory activity shrinking at its fastest rate in three months in October.
The final manufacturing purchasing managers’ index (PMI) from the Au Jibun Bank Japan dropped to 49.2 in October from 49.7 in September. It was slightly higher than the flash reading’s 49.0.
However, for the fourth consecutive month, the index remained below the 50.0 threshold that distinguishes growth from contraction.
According to Usamah Bhatti at S&P Global Market Intelligence, “firms often mentioned weakness in domestic and global demand had weighed on sales and output, particularly in semiconductors and autos.” The subindex of output extended its contraction to reach the lowest level since April due to weak new orders and excess inventories.
Additionally, new orders decreased and remained below the 50.0 threshold for the 17th consecutive month, indicating further declines in sales as a result of subpar demand from the automotive and semiconductor industries. The deterioration in new orders was also attributed by businesses to weak domestic and international demand.
New export orders have decreased the most since March due to muted demand in China and the United States.
Input prices increased in October, but at a slower rate than they had been since April. The weak yen and rising costs of raw materials, labor, logistics, and utilities were blamed by manufacturers for the inflation.
Due to rising operating costs, they increased selling prices in October, and their output prices reached their highest level in three months.
Despite the fact that optimism was little changed from September’s 21-month low, manufacturers’ outlook remained firm.
According to Bhatti’s statement, “Firms highlighted concern regarding the timing of the recovery from the current economic malaise.”
On Thursday, the Bank of Japan signaled the necessity of examining the global economy while maintaining extremely low interest rates. The national bank likewise extended expansion to move around its 2% objective before long, focusing on its determination to continue climbing getting costs in the event that the economy supports a moderate recuperation.
