In Japan, factory activity remained in the zone of a decrease in December, but at the same time, the pace of the corresponding process slowed down.
The mentioned information is contained in the results of the private sector survey, published on Monday, December 30. Japan is currently experiencing an easing decline in production and new orders, approaching stabilization after the fall.
The final au Jibun Bank Japan manufacturing purchasing managers’ index (PMI) showed growth in December, reaching 49.6. In this case, the softest contraction of the indicator for the last three months is observed. In November, the Asian country’s PMI was recorded at 49. At the same time, it is worth noting that this indicator is still below 50. The mentioned mark separates growth from contraction. It is also worth noting that the PMI in Japan has been below 50 for the sixth month in a row.
Usamah Bhatti at S&P Global Market Intelligence, which compiled the mentioned survey, said that the headline reading moved closer to neutral amid the softest reduction of both production and new order intakes.
The Japanese production subindex was on a downward trajectory for the fourth month in a row in December. In this case, the contraction also turned out to be slower than in November.
Japanese manufacturers noted that the decrease in new orders was the main factor in the decline in output.
In the Asian country, the number of new orders has been showing a downward dynamic for 19 consecutive months. The corresponding tendency is observed against the background of such circumstances as weak demand in the domestic market and foreign markets, which are the main ones for Japanese manufacturers. Some companies that participated in the survey suggested that the current situation in the semiconductor market is the major source of the decline in the number of orders.
Employment in the Asian country showed an increase in December. It is worth noting that the corresponding indicator was on a downward trajectory a month earlier. The December result is also the highest since April. Companies that participated in the survey said they hired workers due to labor shortages. The firms also noted that the relevant actions were partly related to preparing for future demand.
Moreover, Japan faced rising input prices in December. The corresponding indicator increased at the fastest pace since August. Companies participating in the survey reported a growth in costs for raw materials and labor.
The weak yen also contributed to higher inflation in Japan. Against the background of such a circumstance as price increases, companies raised their output prices at the fastest pace in the last five months.
It is worth noting separately that Japanese manufacturers continue to demonstrate a high level of confidence about their prospects. They are currently expecting business expansion. An appropriate attitude in the context of the vision of the future is observed against the background of the launch and mass manufacturing of new products.
Mr. Andrew Harker, economics director at S&P Global Market Intelligence, said that service providers posted a sharp increase in activity and new businesses as the latest wave of the coronavirus pandemic faded, and demand increased amid this process.
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