Japan PMI Manufacturing was finalized at 48.9 in September, down from 49.3 in August. That’s also the lowest level since February. Output reduced as deterioration in demand extends into September. Firms link export weakness to lower sales to China, US and Europe. Business expectations remain historically subdued.
Commenting on the latest survey results, Joe Hayes, Economist at IHS Markit, said:
“PMI data suggest that the Japanese manufacturing sector ended the third quarter on a negative footing, with the headline index at its lowest mark since February. Crucially, the stronger deterioration comes ahead of the consumption tax hike, and suggests that manufacturing and exports are both likely to have been drags on third quarter GDP.
“Japan continues to suffer from the trade-led global growth slowdown. While new product launches, particularly in the tech and capital goods space, provide some mild reason for optimism, concern of trade frictions being drawn out further are underpinning a cautious approach.
“Strength in the trade-weighted yen so far this year has also meant that the currency has not been able to mitigate the impact of the global trade slowdown. To that end, the service sector’s ability to weather the sales tax hike in the fourth quarter will be crucial to keeping the economy afloat into the year-end.”
