Japan manufacturing sector closer to stabilisation in Apr: S&P Global

Employment growth picked up, whilst destocking continued to slow. Confidence in the future remained positive.

On the price front, output price inflation accelerated to an 11-month high as firms sought to pass on higher input costs to clients.

The headline au Jibun Bank Japan manufacturing PMI recorded 49.6 in April. Although still below the crucial 50 no-change mark, the index posted its highest level for eight months and was noticeably higher than March’s 48.2.

Latest data showed that output was down again in April, extending the current period of contraction to 11 months. The rate of decline was, however, modest and the lowest recorded by the survey since last October.

Firms again continued to signal a preference for utilising existing inventories rather than raising output. There were also reports that a lack of incoming new orders had weighed on production.

Amid reports of soft demand and destocking at clients, new orders were also down for an eleventh successive month.

The degree to which sales fell was marginal and eased noticeably for a second month running in April. New export volumes also declined amid evidence of low demand from key export markets like China and the United States.

Against a backdrop of subdued underlying trends in output and new orders, purchasing activity was reduced for a twenty-first successive month. The cut was modest, and the lowest recorded since October 2022.

Companies observed an improvement in supplier performance, as evidenced by the first shortening of lengthening lead times in nine months, S&P Global said in a release.

On the cost front, input prices in Japan’s manufacturing sector rose to the steepest degree of the year so far, with inflation remaining above trend.

Confidence in the future meanwhile was unchanged since March, and therefore remained relatively high in the context of the survey history. Firms are looking for the global inventory cycle to turn upwards, and for a general improvement in demand over the next 12 months.

Fibre2Fashion News Desk (DS)