TOKYO, April 3 (Reuters) - Japan's factory activity
shrank at the softest pace in five months in March due to an
expansion of inventories, but still-weak global and domestic
demand conditions meant the post-COVID economic recovery will
take a while to solidify.
The final au Jibun Bank Japan Manufacturing Purchasing
Managers' Index released on Monday rose to 49.2 in March from
February's 47.7, marking the slowest contraction since November
2022. It was also higher than the flash reading of 48.6.
"The health of the Japanese manufacturing sector showed
signs of improvement at the end of the first quarter of 2023,"
said economist Usamah Bhatti at S&P Global Market Intelligence,
which compiles the survey.
"Both output and new orders fell at the softest rates for
five months, though the latter still saw a solid reduction, with
panel members signalling subdued market demand in both domestic
and international markets," Bhatti said.
Manufacturing output and new orders contracted for a ninth
consecutive month, the survey showed, as customer and market
demand remained weak. This was in contrast to the official
manufacturing data released on Friday, which saw Japan's factory
output rise 4.5% in February.
Japan's economy has finally started to recover from the
COVID-driven downturn, though a global slowdown and rising food
prices hang over a full-blown rebound in the growth and the
outlook for exports and consumption. Relatively high inflation
also remains a potential drag on households.
The survey showed the sub-index gauging stocks of finished
goods was at the highest since February 2009, while backlogs of
work declined for six consecutive months, leading some firms
with lower order volumes to focus on building post-production
inventories.
Stocks of purchases expanded consecutively since October
2021 due to price hikes.
Factors including a surge in raw material prices and a
weaker yen contributed to elevated input price inflation even as
the rate of growth was the slowest since August 2021, while the
pace of output price inflation expanded to a three-month high.
Supplier delivery delays continued the trend since January
2020 to stay below the 50.0 threshold, the survey showed.
(Reporting by Eimi Yamamitsu
Editing by Shri Navaratnam)
