TOKYO – Japan’s factory activity growth hit a 20-month low in September, as firms struggled with a global slowdown and pressure from high energy and raw material prices that was exacerbated by a weak yen.
The au Jibun Bank Flash Japan Manufacturing Purchasing Managers’ Index (PMI) slipped to a seasonally adjusted 51.0 in September from the prior month’s final of 51.5.
The headline figure marked the slowest expansion since January 2021, although it stayed above the 50-mark that separates contraction from expansion.
It was pulled down by struggling output and overall new orders, both of which contracted for the third consecutive month. New orders shrank at the fastest rate in two years.
“Overall growth remains subdued as inflationary pressures and deteriorating global economic growth weigh on activity in both the manufacturing and services sectors,” said Joe Hayes, senior economist at S&P Global Market Intelligence, which compiles the survey.
Optimism about conditions for the year ahead dipped in September, coming in at a five-month low, in part due to the yen’s sharp depreciation on widening monetary policy divergence between Japan and the United States.
“The remarkable weakness we’ve seen … year-to-date in the yen continues to push up price pressures, with companies struggling to fully pass on these higher cost burdens to clients,” Hayes said.
The au Jibun Bank Flash Services PMI Index returned to expansion, coming in at a seasonally adjusted 51.9 in September from August’s 49.5 final, the survey also showed.
The au Jibun Bank Flash Japan Composite PMI, which is estimated by using both manufacturing and services, also returned to growth, rising to 50.9 from the prior month’s final of 49.4, it showed.