Japan's manufacturing sector showed signs of a slight contraction in August, with the au Jibun Bank Japan Manufacturing Purchasing Managers' Index (PMI) rising to 49.8 from 49.1 in July. The latest data indicates a slight uptick in production in August, marking the second increase in the last three months. The growth rate was modest but the highest since May 2022. Companies also showed a reduced inclination to rely on existing inventories, with inventory accumulation remaining flat for the month, according to the latest data published by au Jibun Bank Japan Manufacturing PMI on Monday. There were also signs of improvement in new order volumes, which continued to decline in August but at a slower pace than in July. In contrast, new export volumes fell at the steepest rate since March, driven by weaker demand from key export markets, including Mainland China and South Korea. Despite the mixed demand signals, purchasing activity increased for the first time since July 2022, though the rise was marginal. Stocks of purchases fell slightly for the second consecutive month. Japanese manufacturers noted improved supplier performance, as evidenced by the third reduction in lead times over the past five months. Firms frequently mentioned that the availability of goods, particularly electronics, was better than in previous months. However, input price inflation picked up in August, rising to the steepest level since April 2023. A weaker yen and higher raw material costs were cited as the main drivers of inflation. In response, firms raised their charges, but at the softest rate since June 2021. Business confidence strengthened in August, with firms showing robust optimism for a stronger domestic and global economic recovery. This positive outlook contributed to a sustained increase in employment, with the rate of job growth accelerating compared to July. Attribution: au Jibun Bank Japan Manufacturing PMI report Subediting: M. S. Salama Download
