TOKYO (Reuters) – Japan’s factory activity contracted at a moderate pace in December as declines in output and new orders eased, a private sector survey showed, as the country moved closer to stabilizing after a recent decline. shown on Monday.
au Jibun Bank’s Japan Manufacturing Purchasing Managers’ Index (PMI) for December rose to 49.6, marking the first gradual decline in three months. Although the index was slightly higher than the preliminary figure of 49.5 and November’s 49.0, it remained below 50.0, the dividing line between growth and contraction, for the sixth consecutive month.
“Headline numbers have moved closer to neutrality, with modest declines in both production and new orders,” said Osama Bhatti of S&P Global Market Intelligence, who compiled the survey.
The production sub-index shrank for the fourth straight month in December, but the pace of contraction slowed from the previous month. Manufacturers pointed to sluggish new orders as the main reason for the decline in production.
New orders declined for the 19th consecutive month due to weak demand in Japan and major overseas markets. In the survey, some companies suggested that the semiconductor market was behind the slump in new orders.
Employment in December reversed its decline in November and expanded, reaching its highest level since April. Companies participating in the survey said they hired additional employees due to labor shortages and to prepare for future demand.
Input prices rose at the strongest pace since August, with companies citing rising costs of raw materials and labor. The weaker yen also pushed up inflation. To cope with rising prices, companies raised production prices at the fastest pace in five months.
Manufacturers remain confident in their prospects as they look forward to business expansion through new product launches and mass production.
