S&P Global: Japan manufacturing sector contracts for 3rd month

Japanese manufacturing sector deteriorated for the third consecutive month in September 2024, reflecting a renewed fall in production levels and a sustained drop in new orders, according to S&P Global final PMI data released on Tuesday.

Average operating expenses were high, but firms only increased prices slightly to cover these costs. Output charges increased at the slowest rate since mid-2021, the report revealed.

The headline au Jibun Bank Japan Manufacturing Purchasing Managers’ Index (PMI) – a composite single-figure indicator of manufacturing performance – fell at 49.7 in September 2024, from 49.8 in August to indicate a slight decline in overall operating conditions.

Output declined for the second time in three months at the end of the third quarter, with the seasonally adjusted index just below the neutral 50.0 threshold.

Businesses cited a lack of new orders due to economic challenges, but managed to reduce backlogs by completing existing orders. This led to a moderate decrease in backlogs, continuing a two-year trend.

Japanese manufacturers continued to raise employment levels during the latest survey period. That said, the rate of job creation was fractional and the softest in the current seven-month sequence.

Attribution: S&P Global report

Subediting: M. S. Salama