Growth in the Japanese manufacturing sector slowed in September. Production increased at the weakest rate in the current five-month period of expansion, and one that was softer than the average seen this year so far. Meanwhile, new orders from abroad declined at the fastest rate in over two-and-a-half years.
Subsequently, employment and buying activity decreased. In contrast, total new orders increased at a rate similar to August’s seven-month high. On the price front, input costs rose, albeit at only a marginal rate, while output charges decreased.
The headline PMI posted at 51.0, down from 51.7 in August (the highest reading since January), thereby indicating a slower rate of expansion in the Japanese manufacturing sector. Furthermore, the latest reading dropped to a three-month low.
Latest survey data pointed to a slowdown in production growth at Japanese manufacturers. The rate of increase was slight and weaker than the long-run series average. Where output rose, panellists mentioned an increase in sales, while others noted that challenging economic conditions in China had helped to dampen overall production growth.
This contrasted with total new orders, where the rate of increase remained broadly unchanged from August’s seven-month record. Several panellists attributed the increase in new work intakes to advertising campaigns and the launching of new products. Meanwhile, the data suggested that the main driver behind the latest expansion in new orders was the domestic market, as international demand declined.
New orders from abroad decreased for the first time since June last year. Although modest, the rate of decline was the fastest in 31 months. A number of firms mentioned a fall in sales volumes to China as the main contributory factor behind the overall drop in export orders.
Resulting from slower production growth, buying activity declined. Although modest, the rate of decrease was the sharpest since April 2014. Employment levels also contracted during the month for the first time since March.
Input price inflation resumed during the month amid reports of the weakness of the yen against the dollar. However, the rate of inflation was weaker than the historical average. Meanwhile, charges declined at the quickest rate since March 2013.