Updated May 1st, 2024 at 08:53 IST

Japan factory activity contracts slower amid strong market demand

Despite remaining below the crucial 50.0 threshold that marks expansion, this represented the slowest pace of contraction in eight months.

Reported by: Business Desk
Representative | Image:Unsplash
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Japan factory activity: Factory activity in Japan showed signs of improvement in April, with a private-sector survey indicating a slower rate of contraction compared to previous months. According to the final au Jibun Bank Japan manufacturing purchasing managers' index (PMI), the index rose to 49.6 from 48.2 in March, although slightly below the initial estimate of 49.9.

Despite remaining below the crucial 50.0 threshold that marks expansion, this represented the slowest pace of contraction in eight months. Analysts note that while challenges persist, such as declining output and new orders for the 11th consecutive month, the severity of these declines has lessened.

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Factors contributing to the subdued performance include sluggish demand, particularly in key export markets like China and the US, which has impacted both new orders and export orders, especially for automobiles. Additionally, some firms opted to use existing inventories rather than increasing production, further affecting output levels.

On the cost front, input prices increased, particularly in metals, alongside rising freight and logistics expenses. This inflationary pressure prompted firms to raise their output charges, reflecting their confidence in market demand.

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While the weak yen has traditionally aided exports, it has also led to higher import costs, contributing to inflation and potentially dampening household spending.

Despite these challenges, firms maintain optimism regarding future prospects, anticipating an uptick in sales and a revival in the global inventory cycle.

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(With Reuters inputs)

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Published May 1st, 2024 at 08:53 IST