Japan’s factory activity extended declines in September – PMI


Factories line the port of Osaka, western Japan . REUTERS/Thomas White/File photo

TOKYO  – Japan’s factory activity fell at the fastest pace in seven months in September, a survey showed on Monday, as worsening global economic conditions continued to weaken demand.

The final au Jibun Bank Japan manufacturing purchasing managers’ index (PMI) fell to 48.5 in September from 49.6 in August and roughly in line with the flash reading of 48.6. The index has remained below the 50.0 point threshold that separates growth from contraction for four straight months.

Output in September was the lowest since June while the decline in new orders was the steepest since February, S&P Global Market Intelligence data showed.

“Depressed economic conditions domestically and globally weighed heavily on the sector,” said Usamah Bhatti, economist at S&P Global Market Intelligence, which compiled the survey.

READ: Japan’s exports extend decline as China slowdown bites

New export orders have remained in contraction for 19 consecutive months, due to softer demand from mainland China and Taiwan.

In addition to higher raw material, oil, freight and energy prices, the weak yen drove up input price inflation, which hit a four-month high in September, according to S&P.

The yen has come under pressure in recent months, weighed by the Bank of Japan’s ultra-loose monetary policy that has inflated the costs of imported goods and squeezed manufacturers.

READ: Dollar off 10-month high, yen still under intervention watch

Voluntary resignations in September outpaced filling existing vacancies, leaving the subindex employment figure unchanged from the previous month.

The pessimistic headline figure followed government data published last week that showed Japanese factory output remained flat in August.

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Japanese manufacturers’ future output expectations rose again after hitting the weakest level in growth in six months in August, S&P said.

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