Sat, 10 Dec 2022

Japanese factory activity grows at slowest pace in 20 months

Robert Besser
28 Sep 2022, 17:10 GMT+10

TOKYO, Japan: As Japanese firms are coping with a global economic slowdown and high energy and raw material costs exacerbated by a weak yen, the country's factory activity grew in September at its slowest pace in 20 months.

In September, the country's au Jibun Bank Flash Japan Manufacturing Purchasing Managers' Index (PMI) dropped to a seasonally adjusted 51.0 from 51.5 in August.

While staying above the 50-mark that separates contraction from expansion, the figure is the slowest expansion since January 2021, dragged down by low levels of output and new orders.

Joe Hayes, senior economist at S&P Global Market Intelligence, which compiles the survey, said, "Overall growth remains subdued as inflationary pressures and deteriorating global economic growth weigh on activity in both the manufacturing and services sectors."

Partly due to the yen's sharp depreciation, optimism about conditions for the coming year dropped in September to a five-month low.

"The remarkable weakness we have seen year-to-date in the yen continues to push up price pressures, with companies struggling to fully pass on these higher cost burdens to clients," Hayes added.

The survey also showed that the au Jibun Bank Flash Services PMI Index returned to expansion, coming in at a seasonally adjusted 51.9 in September from August's figure of 49.5.

The au Jibun Bank Flash Japan Composite PMI, which is estimated by using both manufacturing and services, also rose to 50.9 from 49.4 in the previous month.

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