Japan witnesses slight downturn in manufacturing sector in Jun 2023

New export orders fell at a rate not seen since February. In spite of the subdued demand, supplier performance improved in June with delivery times shortening at the fastest pace since March 2016, au Jibun Bank said in a press release.

Inflationary pressures remained on a downward trend at the end of the second quarter, with input costs rising at the softest pace since February 2021 and selling price inflation cooling to a 21-month low.

Even though the indices for total new business and new export orders moderated from their all-time highs in May, they still demonstrated solid growth. This ongoing improvement in demand conditions was often linked to an increase in customer numbers and spending as the impact of the COVID-19 pandemic continued to lessen.

The au Jibun Bank Japan Manufacturing PMI is compiled by S&P Global from survey responses from a panel of around 400 manufacturers. The PMI is a weighted average of the following five indices—new orders at 30 per cent, output at 25 per cent, employment at 20 per cent, suppliers’ delivery times at 15 per cent, and stocks of purchases at 10 per cent.

Annabel Fiddes, economics associate director at S&P Global Market Intelligence, said: “After posting its second-strongest expansion on record in May, driven largely by the service sector, the latest Flash PMI data indicate that growth momentum slowed across Japan’s private sector at the end of the second quarter.

“The softening of growth momentum fed through to reduced optimism around the outlook, with business confidence slipping to a five-month low. Some firms expressed more caution around the outlook due to strong cost pressures and lingering global economic uncertainty. However, there was some better news in terms of inflationary pressures, which showed further signs of easing. Notably, input price inflation softened to a 22-month low in June, while output charges increased at the softest pace since January.”

ALCHEMPro News Desk (NB)