Japan's manufacturing sector experienced another contraction in October, as revealed by S&P Global's latest report. The manufacturing purchasing managers index (PMI) declined to 49.2, down from 49.7 in September, slipping further below the crucial 50-point benchmark that differentiates growth from contraction. The report indicates that overall new orders suffered a drop for the 17th consecutive month, with demand reduction being a primary driver, particularly noticeable in the automotive and semiconductor industries.
Concerns among factory managers were exacerbated by sluggish export demand, particularly from key markets such as the US and China. On the inflation side, Japanese industry leaders reported increases in raw material, labor, and utility costs; however, the pace of price hikes was the gentlest observed since April.
Manufacturers responded to these pressures by increasing their own prices. With demand waning, factory employment levels in Japan remained stable as managers tackled diminishing backlogs. Overall, factory managers' outlooks were less optimistic than in previous seasons. Confidence levels showed little variation from the near two-year low recorded in September, with firms emphasizing worries about the timing of recovery from the current economic downturn.
Nevertheless, there is cautious anticipation of improved demand in the automotive and semiconductor sectors, as well as expectations for new product launches and better global economic conditions. The Japan manufacturing PMI is derived from survey responses collected from approximately 400 manufacturers during the period from October 10 to October 24..