Factory activity in Japan fell at the sharpest pace in 26 months in December, a business survey showed on Wednesday, with companies expecting further drops amid a global economic slowdown.
In December, the au Jibun Bank Japan manufacturing purchasing managers’ index dropped to a seasonally adjusted 48.9 from November’s final 49.0. This was the lowest reading since October 2020, when it hit 48.70.
The report cited “weak global economic trends” as the cause of the manufacturing declines.
“The downturn was largely centred around the current demand environment which is weak both internationally and domestically,” said Laura Denman, economist at S&P Global Market Intelligence.
Input price inflation fell to a 15-month low, signaling lessening cost pressures, according to the poll, but the remainder of the results pointed to darker prospects for Japan Inc. in early 2023.
Analysts predict that Japan’s production will remain weak for the next few months as a result of falling international demand and the coronavirus situation in China.
