Overall business conditions among Japanese manufacturers deteriorated for the tenth consecutive month in March, though the rate of contraction eased from the previous survey period amid softer reductions in both output and new orders, according to S&P Global.

The headline au Jibun Bank Japan manufacturing purchasing managers’ index (PMI)—a composite single-figure indicator of manufacturing performance—rose from 47.2 in February to 48.2 in March to signal a deterioration in the health of the Japanese manufacturing sector.

The reduction was modest, and eased to the softest for four months.

Firms continued to associate the declines to weak customer demand in domestic and external markets, which meant firms adjusted production accordingly.

At the same time however, firms looked to keep on top of capacity requirements by raising employment levels for the first time in three months.

The au Jibun Bank Japan manufacturing PMI is compiled by S&P Global from responses to monthly questionnaires sent to purchasing managers in a panel of around 400 manufacturers.

On the price front, firms recorded a further softening in the rate of input price inflation, bringing it to a 37-month low and in line with the long-run average. That said, prices charged for manufactured goods rose at the strongest rate since last December as firms looked to protect margins.

Contributing to the sub-50.0 PMI reading was a further solid contraction in output levels in March, though the rate of decline eased from that seen in February, S&P Global said in a release.

The rate of decline of new orders at the end of the first quarter this year eased from February, and was the softest for five months, though remained solid overall. According to respondents, demand in both domestic and international markets continued to cool. As such, the rate of contraction in the latter was the most marked seen since February 2023.

Weak customer demand allowed firms to work through existing orders, as signalled by a stronger fall in backlogs of work. Moreover, the rate of depletion was the second-strongest in the current 18-month sequence.

Firms often indicated they kept on top of capacity requirements to work through outstanding business. As such, manufacturers raised employment levels for the first time in three months and at the strongest rate since last July.

On the prices front, input cost pressures continued to ease in the latest survey period. Input prices rose at a strong rate that was nonetheless the softest since February 2021, and in line with the long-run average.

Firms centred hopes on a broad domestic and global demand recovery, which would in turn stimulate sales and new products.

Fibre2Fashion News Desk (DS)

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