Japan’s PMI Manufacturing was finalized at 47.9 in December, down from November’s 48.3, marking the most significant sector contraction since February 2023. S&P Global reports that this downturn was characterized by notable declines in both production and new orders, alongside rise in input price inflation. Despite these challenges, there was an unexpected increase in business confidence, reaching a five-month high.
Paul Smith from S&P Global Market Intelligence noted, “Market uncertainty led to reduced orders and output, especially from key export clients in China, Europe, and North America.” He also mentioned specific struggles in the electronics sector and a general lack of investment.
However, Smith acknowledged increased cost pressures, with input price inflation at a three-month high due to more expensive raw materials, particularly imports.
Looking ahead, Smith conveyed optimism among Japanese manufacturers, expecting an end to client destocking and predicting that new product launches will boost production in 2024.
