Overall business conditions for Japan's manufacturers deteriorated for the fifth consecutive month, primarily driven by a slump in new orders, reported S&P Global on Monday. The manufacturing purchasing managers index (PMI) for Japan fell to 49.0 in November, down from 49.2 in October, slipping further below the 50-point threshold that indicates growth versus contraction, according to the monthly survey. "There was a sustained contraction in new order volumes, which contributed to the steepest reduction in production levels since April," stated S&P Global. Japan's factory managers have been grappling with diminishing demand over recent months, partly due to soft international markets.
The current declines in both total new orders and new export business have extended to 18 and 33 months respectively, as explained by S&P Global. Notably, production slowdowns were observed in the automotive and semiconductor manufacturing sectors during November, as added by S&P Global. The sharp decline in both orders and production led Japan's factory managers to initiate staff reductions in November, marking the first decrease in sector payrolls in nine months, as reported by the credit-rating agency. Despite the sluggish market conditions, Japan's factory managers continued to confront input-cost inflation, stemming from rising labor, logistics, and raw material expenses, especially concerning imported goods, stated S&P Global. Despite the protracted downturn in new orders, sentiment among Japan's industrial managers remained optimistic regarding future prospects.
Survey participants expressed optimism that this challenging period would eventually pass within the next year, anticipating that new product launches would drive sales alongside a recovery in both domestic and global economies, as advised by S&P Global. The November manufacturing PMI for Japan was compiled by S&P Global from the responses of 400 manufacturers between November 12 and November 22..