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TOKYO (Reuters) – Japanese production activity rose at the slowest rate in 10 months in July as emerging value tension and supply disruptions hurt production and new orders, suggesting there is still a long way to go for a strong post-pandemic economic recovery.
Jibun Bank Japan Manufacturing’s final purchasing managers’ index (PMI) fell to a seasonally adjusted 52. 1 in July from the last month of 52. 7.
This marked the slowest expansion speed since September last year and was below a fast reading of 52. 2.
Japan’s economy has struggled to stay safe after the pandemic hit, with COVID surges in China, the war in Ukraine, and rising commodity costs all weighing on foreign demand.
Manufacturing activity was affected by contraction in global production and new orders, as well as slower expansion of the order book, the PMI survey showed.
However, corporations continued to increase their headcount, although they remained confident about the situations ahead, the degree of optimism was little replaced compared to June.
“The global PMI has masked some worrying trends in the underlying sub-indices, which carry dangers of problems for the sector,” said Usamah Bhatti, an economist at S.
New orders fell for the first time in 10 months, while production grades experienced their first contraction since February, Bhatti added.
“The drop in demand has also helped put pressure on operating capacity,” he said.
“Back orders have grown at the slowest rate in 17 months, suggesting a weakening of production in the coming months. “
Official knowledge released on Friday painted a brighter picture of production activity, which showed Japanese factories ramping up production in June at the fastest rate in more than years, as disruptions due to China’s COVID-19 restrictions eased.
But a government official also warned that dangers of production problems persisted, as delays persisted in the origin of spare portions. This is one of the many reasons why the Bank of Japan remains firmly committed to its ultra-low policies despite a global upward trend. in interest rates to combat runaway inflation.
(Reporting through Daniel Leussink; Edited via Shri Navaratnam)