Japan factory activity posts sharpest fall in more than 2 years in December
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The reading is the weakest since October 2020 and marks the second month below the 50-line that separates contraction from expansion.
PHOTO: REUTERS
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TOKYO - Japanese factory activity fell in December at the sharpest pace in 26 months, a business survey showed on Wednesday, with companies seeing further declines amid a global economic slowdown.
The au Jibun Bank Japan manufacturing purchasing managers’ index edged down to a seasonally adjusted 48.9 in December from November’s final 49.0.
Although slightly higher than the flash figure of 48.8, the reading was the weakest since October 2020 and marked the second month below the 50-line that separates contraction from expansion.
“The downturn was largely centred around the current demand environment, which is weak both internationally and domestically,” said Ms Laura Denman, economist at S&P Global Market Intelligence, which compiles the survey.
Output and new orders extended their contraction for a sixth month in December at slower paces than November,
While the survey showed input price inflation was cooling to a 15-month low, indicating easing cost pressures, the rest of the results pointed to darker prospects for Japan Inc in early 2023.
Manufacturers were expecting a further downturn in their business conditions, with the sub-index of future output hitting the lowest level since May, when China’s Covid-19 lockdowns disrupted the supply chains for Japanese companies.
“Forward-looking indicators are increasingly painting a gloomier picture for Japan’s manufacturing sector in the future,” Ms Denman said.
The survey corroborates the weak factory output data released last week that showed contraction for a third month in November.
Analysts expect Japan’s production to remain subdued for the coming months due to falling overseas demand, with the Covid-19 situation in China
