Japan’s manufacturing reaches 49.6% in April – PMI
Japan’s manufacturing sector edged closer to stability in April, according to the latest au Jibun Bank Japan Manufacturing Purchasing Managers’ Index (PMI) survey published by S&P Global Market Intelligence on Wednesday.
The headline PMI reached 49.6 in April, the highest in eight months and significantly better than March’s reading (48.2). However, it remains below the 50.0 threshold that separates expansion from contraction.
Production levels fell for the 11th consecutive month, but the rate of decline was the lowest since last October. Companies prioritised using existing inventories rather than ramping up production due to soft demand.
New orders contracted for the 11th month in a row, though the decrease was marginal and continued a two-month trend of slower decline. Export orders also dipped due to weak demand in key markets like China and the US.
Purchasing activity fell for the 21st straight month, but at the slowest pace since October 2022. Companies continued to utilise existing inventories, leading to a slight decrease in input stock levels.
Input prices surged to the highest level of the year, driven primarily by rising metal costs. Companies responded by increasing their own output prices at the fastest pace in 11 months.
Business confidence remained unchanged from March, holding at a relatively positive level compared to historical data. Companies anticipate an upturn in the global inventory cycle and a general improvement in demand over the next year.
This optimism partly explains a second consecutive month of solid job growth, the strongest since September 2022.
“The latest PMI data continued to paint a fairly subdued picture of Japanese manufacturing sector performance, although another rise in the headline PMI points to a sector heading towards at least stabilisation in the near-term. Output and new orders both fell to slower degrees, whilst there was a reduced rate of destocking as firms signalled hopes of a turn upwards in the inventory cycle. Indeed, with expectations of higher sales in the coming months, goods manufacturers are hopeful that output will move into growth territory soon and are preparing for this accordingly by taking on additional workers.” Paul Smith at S&P Global Market Intelligence, commented.
