The manufacturing sector in Japan slipped into contraction for the first time in nine months, the latest survey from Markit Economics showed on Friday with a revised manufacturing PMI reading of 49.9.
That’s up from last month’s preliminary April reading of 47.7, although it’s down from 50.3 in March. It also slipped below the boom-or-bust line of 50 that separates expansion from contraction.
“The latest PMI data signaled worsening operating conditions in the Japanese manufacturing sector. Manufacturing production contracted for the first time since July 2014 in April. Panelists reported a fall in demand from both domestic and international clients and challenging economic conditions as the main factors behind the decline in new work,” said Markit economist Amy Brownbill.
Latest data signaled worsening operating conditions in the Japanese manufacturing sector. Production contracted for the first time since July 2014, underpinned by a further decline in new orders. Meanwhile, growth in new export orders slowed to the weakest in the current 10-month sequence of expansion. On the price front, input price inflation eased to the slowest in over two years.
New orders at Japanese goods producers fell for the second straight month in April. Moreover, the rate of decline was the fastest since when the higher sales tax was implemented in April last year. All three sectors saw falls in sales volumes, with intermediate goods producers noting a slightly quicker decline.
Despite the weakening yen against the dollar, new export orders growth slowed to the weakest in the current 10-month period of expansion. This was reflected in the sector data as all three surveyed sectors saw weaker international demand.
Contrasting with contractions in production and new orders, manufacturers hired additional staff in April. However, the rate of growth was weak and below the average over the past 12 months. Meanwhile, volumes of unfinished work declined for the second straight month. Moreover, the rate of depletion was the fastest since November 2014.
On the price front, purchasing prices continued to rise, although at the weakest rate since February 2013. Where prices rose, firms frequently mentioned the depreciation of the yen driving up imported raw material costs. Meanwhile, charges declined for the third month in a row, but only at a slight pace.
“Despite reports of a weakening yen against the dollar, new orders from abroad slowed to the weakest in the current ten-month sequence of expansion. Meanwhile input price inflation eased to the weakest in over two years, while charges continued to fall, albeit at a slight pace,” Brownbill said.
The material has been provided by InstaForex Company – www.instaforex.com