Fashion
Japan factory downturn eases as PMI inches up to 48.7 in November: S&P
Manufacturers reported softer declines in output, with some firms increasing production in anticipation of stronger future demand. Consumer goods producers saw a marginal improvement, while operating conditions remained weak in intermediate and investment goods categories.
Japan’s manufacturing PMI edged up to 48.7 in November from 48.2, marking a fifth month of contraction but the mildest decline since August.
Weak demand and falling new orders persisted, though output softened and employment rose slightly.
Input costs increased at the fastest pace since June, prompting higher selling prices.
Business confidence reached a 10-month high as firms anticipated recovery.
New business continued to fall solidly amid sluggish global conditions, tighter customer budgets, and reduced capital investment. Export orders also declined, albeit at a modest pace, S&P Global said in a press release.
Cost pressures intensified, with input prices rising at the fastest rate since June, driven by increased staffing and raw material expenses. Firms raised selling prices again at a solid pace to offset cost burdens.
Purchasing activity and inventories fell further as companies adjusted to subdued demand. Stocks of purchased items declined at the steepest rate in five years, while delivery times lengthened for a fifteenth straight month due to supplier shortages.
Employment saw a slight uptick—the fastest increase in three months—as firms filled vacancies and prepared for planned expansions and upcoming retirements. Backlogs of work continued to decline for the 38th consecutive month.
Despite persistent weakness in current conditions, business confidence improved to a ten-month high, reflecting expectations of gradual recovery ahead.
“The latest PMI data showed that Japan’s manufacturing sector continued to struggle with weak demand conditions in November, with firms signalling another solid decline in overall new business. Reduced demand was reported across key markets across Asia, with weaker-than-expected sales across the automotive and semiconductor industries noted in particular,” said Annabel Fiddes, economics associate director at S&P Global Market Intelligence.
“Encouragingly, production fell at a slower and only marginal rate, which coincided with improved optimism around the year-ahead. Overall, business confidence rose to the highest level since the start of the year. Upbeat projections also supported a further rise in employment, as a number of firms anticipated a recovery in market demand over the course of 2026,” added Fiddes. “With Japan’s new prime minister recently announcing a substantial economic stimulus package – the biggest since the pandemic – it will be important to see how this impacts demand and the sector’s performance as the administration seeks to boost investment in key strategic areas such as AI.”
The survey indicated that Japanese factories were more upbeat about the 12-month outlook for output in November. Furthermore, the degree of optimism was the highest seen since January amid reports of new product launches and forecasts of stronger customer demand, added the release.
Fibre2Fashion News Desk (SG)