Japan Jan factory activity shrinks modestly on softer demand - PMI

TOKYO: Japan's factory activity shrank for an eighth straight month in January as output and new orders declined due to the subsiding economy at home and overseas, a private-sector survey showed on Thursday.

The final au Jibun Bank Japan manufacturing purchasing managers' index (PMI) rose to 48.0 in January from 47.9 in December, but remained below the 50.0 threshold that separates growth from contraction in activity, where it has languished since June.

"Depressed economic conditions at home and globally weighed heavily on the sector," said Usamah Bhatti at S&P Global Market Intelligence.

The two main subindexes of the PMI, output and new orders, declined for an eighth month in a row though the pace of the falls slowed.

Also, worries remained over manufacturing activity in the coming months as outstanding business showed the sharpest depletion since August 2020.

"Japanese manufacturers faced additional pressures on the price and supply front," he said.

Manufacturers cited cost pressures grew due to higher prices of raw materials, labour and fuel. Some firms noted the impact of the supply disruption caused by a crisis in the Red Sea.

The employment and stocks of purchases also weighed on the headline index, the survey found.

The contraction in new orders was also a concern as a lack of incoming business led to the sharpest falls in outstanding work in over three years, it showed.

Manufacturers' confidence remained strong, staying above the series average led by hopes for improved demand in markets such as semiconductors, though optimism slightly dipped from December

Japanese big manufacturers' sentiment slid in January for the first time in four months and was expected to remain subdued, the Reuters Tankan poll showed earlier this month, showing concerns about weak demand from China and global growth. - Reuters