Japan's Business Activity Experiences Decline in October Amid Economic Challenges

01 Nov, 2024

Japan's Jibun Bank Manufacturing PMI Index dropped to 49.2 in October, marking the most significant decline in three months, according to an S&P Global report released on Friday. This reading falls below the neutral 50 mark, signaling a contraction in Japan's manufacturing sector. The latest figure also indicates a deeper slowdown in business activity compared to September’s reading of 49.7, showing that manufacturing has been struggling to regain momentum.

The October data reflects a more pronounced decline in the sector’s health, as manufacturing output, though only marginally reduced, dropped at the fastest rate since April. Additionally, new orders fell sharply, with the highest contraction recorded in the past three months. Economists point to the dampened domestic and global demand as primary contributors to this trend, affecting key areas like semiconductors and automotive production.

Usamah Batti, Economist at S&P Global Market Intelligence, highlighted these challenges, noting that the demand weakness weighed heavily on both sales and output across various manufacturing sectors. These headwinds have posed challenges for Japan’s manufacturing firms, which are navigating uncertainties in global demand dynamics and pressures from subdued domestic consumption.

This latest PMI data serves as a critical indicator of Japan’s economic health, emphasizing the challenges in sectors heavily reliant on global supply chains and demand.

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