Japan records 19-month decline in factories in December – PMI

TOKYO (Reuters) – Japanese factory activity ended a series of record 19-month declines in December, with output leveling off for the first time in two years, suggesting manufacturers are shedding the impact negative of the coronavirus pandemic.

The private sector data contrasts somewhat with last week’s government figures which showed industrial production growth stagnated in November due to lower auto production due to weakening shipments to United States and Australia.

Jibun Bank Japan’s final Manufacturing Purchasing Managers (PMI) index rose to seasonally adjusted 50.0 in December from 49.0 the previous month and a preliminary reading of 49.7.

The overall index hit the 50.0 threshold that separates contraction from expansion for the first time since April 2019, largely because production and employment conditions stopped declining, ending the longest series of declines on record.

“Japanese manufacturers have reported a broad stabilization of operating conditions at the end of a tumultuous year,” said Usamah Bhatti, economist at IHS Markit, who compiles the survey.

The PMI survey also showed that global new orders declined at the slowest pace since December 2018. Growth expectations for the coming year have increased in hopes that the COVID-19-induced slowdown will continue. fade and new product launches will stimulate demand.

“Companies have reported a sustained increase in optimism, with a third of those surveyed predicting an increase in production over the next 12 months,” Bhatti said.

Investigation results were not entirely optimistic, with export orders shrinking faster for the second month in a row thanks to recently imposed restrictions on the coronavirus in major export markets, particularly in Europe .

Purchases also declined at a faster pace compared to the previous month, with lower production and order volumes leading to reduced purchases of raw materials.