Manufacturing activity in Japan grew at a faster pace in March than of the prior month, boosted by domestic demand and waning impact of the coronavirus pandemic.
However, activity in the manufacturing sector saw sharp decline in new export orders as external demand suffered from pandemic curbs in China and Russia-Ukraine war which cause supply chai disruption and price pressure to worsen.
The final au Jibun Bank Japan Manufacturing Purchasing Managers’ Index (PMI) rose to a seasonally adjusted 54.1 in March, up from a 53.2 flash reading and the previous month’s final of 52.7.
The reading meant manufacturing activity came in above the 50.0 threshold that separates contraction from expansion for the 14th straight month.
“The Japanese manufacturing sector saw an improvement in operating conditions at the end of the first quarter,” said Usamah Bhatti, economist IHS Markit, which compiles the survey, as reported by Reuters.
“New order inflows saw a quickening in growth, as firms recovered from the surge in COVID-19 cases at the start of the year.”
“Anecdotal evidence also linked the war to exacerbated price and supply pressures,” Bhatti said.
The survey showed manufacturers saw steepest rise in input prices since August 2008, following a rapid increase in the price of oil and other raw materials.
Firms’ optimism about output conditions for the 12 months ahead became slightly less positive on the downside overseas risks, while they also reported a deterioration in lead times amid material shortages.
“There was a survey-record increase in stocks of inputs as firms sought to grow safety stocks and unused inputs accumulated due to shortages of critical components,” Bhatti said.
