The beginning of the third quarter signalled worsening operating conditions in the Japanese manufacturing sector. Both production and new orders declined, albeit at weaker rates than seen in June. Meanwhile, international demand fell at the sharpest rate in over three-and-a-half years, with many panellists blaming the appreciation of the yen leading to a reduction in global competitiveness. On a more positive note, the stronger yen/dollar rate helped to ease inflationary pressures as input prices decreased at the fastest rate since November 2009. Jobs growth also picked up, although was marginal overall.
