Japanese manufacturing conditions deteriorate at quicker pace in Sep

Factory output fell at the quickest pace in six months amid a steeper decline in overall new work, while companies raised their staffing levels at a much slower pace.

Business confidence around the year-ahead slipped to the lowest in five months.

While the rate of input cost inflation remained slower than that seen on average over the first half this year, selling prices increased at a faster and solid pace.

Business conditions have now worsened in 14 of the past 15 months. Intermediate goods producers recorded a solid deterioration in conditions, while both consumer and investment goods segments recorded only marginal rates of decline.

Manufacturing output saw an accelerated decrease during September. Furthermore, the rate of contraction was the quickest seen in six months, with survey respondents often linking the fall to reduced inflows of new work.

The overall amount of new business placed with Japanese manufacturers fell at a solid rate that was the fastest since April. Companies often mentioned that weaker market conditions had dampened customer spending and made clients more cautious with regards to their inventory levels, an S&P Global release said.

New export orders also decreased again at the end of the third quarter. Though solid, the rate of contraction eased from August's 17-month record.

The latest drop in export sales was partly linked to lower demand across China and the impact of US tariffs.

Meanwhile, hiring activity slowed notably in September. The latest increase in employment at Japanese manufacturers was the weakest recorded since February and only fractional. There were further signs of spare capacity, with outstanding orders falling further in the month. Notably, the rate of backlog depletion was the sharpest seen since January. Companies often mentioned that fewer new orders had enabled them to process and complete unfinished workloads.

Reduced customer demand also led firms to cut back on purchasing activity again in the latest survey period.

The rate of input price inflation edged up to a three-month high and was sharp. Companies often linked higher expenses to increased raw material and labour costs. However, the pace of inflation remained much slower than that seen on average over the first half of the year.

ALCHEMPro News Desk (DS)