Japan PMI Manufacturing was finalized at 51.5 in September, down from August’s 52.7. Markit noted renewed reductions in production and incoming business. Cost burdens has the sharpest rise in 13 years amid supply chain disruption. Businesses confidence, however, strengthened for the first time in three months.
Usamah Bhatti, Economist at IHS Markit, said:
“September data indicated a softer improvement in the health of the Japanese manufacturing sector, as the latest Manufacturing PMI signalled that firms began to feel the impacts of the resurgence in COVID-19 cases related to the Delta variant and ongoing supply chain disruption.
“Japanese firms recorded renewed declines in both output and new orders, as businesses succumbed to disruption caused by strict pandemic restrictions and raw material shortages. Positively, external markets reversed the decline seen in August to return to expansion territory, although the rate of growth was only mild.
“Supply chain disruption continued to dampen activity and demand during September. Firms noted a sharp deterioration in vendor performance as supplier delivery times lengthened to the greatest extent since April 2011.
“Yet, Japanese goods producers were confident that these challenges would lift in the near term and noted stronger optimism regarding the year ahead outlook. Confidence was underpinned by hopes that the end of the pandemic would trigger a broad recovery in demand, and encourage a number of new product launches. IHS Markit estimates that industrial production will rise by 8.2% in 2021, though this will not fully recover the output lost to the pandemic last year.”
