TOKYO- Japan’s manufacturing activity grew at a slower pace from the previous month in April as supply chain disruptions and strict Chinese coronavirus lockdown measures hurt overseas demand.
Activity in the sector was held up by resilience in output, overall orders and optimism about the year ahead, even as producers grew more wary of persisting price pressures, the Ukraine war, logistics logjams and the global economic outlook.
The final au Jibun Bank Japan Manufacturing Purchasing Managers’ Index (PMI) fell to a seasonally adjusted 53.5 in April from the prior month’s 54.1 final.
That was largely in line with a 53.4 flash reading. The 50-mark separates contraction from expansion.
“Latest PMI data pointed to a sustained expansion in the Japanese manufacturing sector at the start of the second quarter,” said Usamah Bhatti, economist at S&P Global, which compiles the survey.
“The rate of growth eased from March as firms noted softer growth in new orders and a broadly unchanged expansion in production levels.”
The PMI survey showed that input prices jumped at the strongest pace since August 2008, pushing manufacturers to raise selling prices at the fastest rate in the survey history.
That saw firms’ optimism about conditions for the 12 months ahead to drop to its lowest since July 2020.
“Though still optimistic, Japanese goods producers were increasingly wary of the continued impact of price and supply pressures, and also the impact of the war and extended lockdowns in China,” Bhatti said.
Japan recorded a trade deficit in March that was more than four times wider than market forecasts, as China-bound exports slowed sharply while soaring energy prices raised the cost of imports, adding to economic challenges brought by conflict in Ukraine.
Outgoing trade was restrained by a decline in car exports and a slowdown in the growth of shipments to Japan’s biggest trading partner China, data showed, indicating continuing risk from global supply constraints and the coronavirus pandemic.
The persistent trade deficit highlights the world’s third-largest economy’s vulnerability to soaring import costs.
“Japan’s economy may see a slower recovery if China-bound exports are sluggish,” said Takeshi Minami, chief economist at Norinchukin Research Institute. Exports to China make up over a fifth of Japan’s total shipments in value terms, he said.
Imports soared 31.2 percent in the year to March, Ministry of Finance data showed on Wednesday, above a median forecast of 28.9 percent in a Reuters poll of economists.
That outpaced a 14.7 percent rise in exports, resulting in a trade deficit of 412.4 billion yen ($3.19 billion) – eclipsing the 100.8 billion yen estimated in the poll. – Reuters
