TOKYO (Reuters) – Japan’s manufacturing activity grew at its slowest pace in 21 months in October on marked declines in output and overall new orders, as exports were partly hurt by worsening conditions in China and South Korea.
The data suggested the outlook for manufacturers at home and trade activity in the broader region was uncertain, posing a headache for Japanese policymakers as they brace for a potential global recession due to monetary tightening around the world.
The au Jibun Bank Japan Manufacturing Purchasing Managers’ Index fell to a seasonally adjusted 50.7 in October from September’s 50.8 final.
The headline figure, which matched the flash reading, marked the weakest growth since January last year, though it stayed above the 50-mark that separates contraction from expansion.
“The latest survey data signalled that Japan’s manufacturing sector lost further momentum in October,” said Laura Denman, economist at S&P Global Market Intelligence, which compiles the survey.
“Sluggish markets and weaker demand conditions, on both a domestic and international level, became a recurring trend,” she said, adding that worsening conditions in China and South Korea hurt Japan’s exports last month.
Output and overall new orders both contracted for the fourth straight month, the survey results showed.
On the plus side, it also showed that manufacturers were upbeat about the outlook for the 12 months ahead on hopes of an easing of supply bottlenecks and a sustained coronavirus pandemic recovery.
Business expectations jumped to a nine-month high despite prolonged pressure from high input costs, according to the survey.
(Reporting by Daniel Leussink; Editing by Shri Navaratnam)