Japan’s December factory activity saw a slower decline, approaching stability after recent downturns, according to a survey published on Monday.
The final au Jibun Bank Japan Manufacturing PMI increased to 49.6, marking the mildest contraction in three months. Although slightly above the 49.5 flash reading and November’s 49.0, it remained under the 50.0 threshold, indicating contraction for the sixth month running.
Usamah Bhatti of S&P Global Market Intelligence highlighted, “The main index neared neutrality due to softer reductions in production and new orders.”
The production subindex fell for a fourth consecutive month, although at a reduced rate compared to the previous month, with manufacturers attributing this to lackluster new orders. The reduction in new orders persisted for the 19th month in a row, hampered by weak demand both domestically and in critical overseas markets, particularly the semiconductor sector impacting order volumes.
Contrarily, employment showed growth, reversing November’s decline, and reaching its highest levels since April. Companies increased hiring in response to labor shortages and in anticipation of future demand spikes.
Input prices surged to their fastest pace since August, as raw materials and labor costs escalated, exacerbated by a weakened yen that fueled inflation. In response, firms increased their output prices at the sharpest rate in five months.
Despite current challenges, manufacturers remain optimistic, expecting growth driven by the launch and mass production of new products.
