Japan PMI Manufacturing was finalized at 48.4 in December, down from November’s reading of 48.9. Key findings include: 1) Production Cut at strongest rate since March; 2) Weak domestic and external conditions weigh on demand; 3) Output charges reduced as firms try to stimulate sales.
Commenting on the latest survey results, Joe Hayes, Economist at IHS Markit, said:
“Japan’s manufacturing sector has ended 2019 where it started, stuck in contraction with little hope of an imminent turnaround. Taking all fourth quarter survey data as one, the manufacturing economy has endured its worst performance in over three years, with momentum clearly to the downside heading into 2020.
“Looking at the sub-sector data, the capital goods market appears to be suffering the most and has subsequently contributed to the stronger decline in the goods-producing economy. That said, survey data highlighted that weak demand remains an industry-wide problem, impacting output volumes and causing firms to cut their prices in hopes of turning the tide.
“Overall, the manufacturing sector appears set to negatively contribute to GDP in the fourth quarter and, if considered in tandem with the December flash services PMI figures, the chance of an economic contraction in the fourth quarter looks strong.”
