Japan's factory activity growth hits 20-month low in September

TOKYO Japan's factory activity growth hit a 20 month low in September, as firms struggled with a global slowdown and pressure from high energy and raw material prices that were exacerbated by a weak yen.

The PMI of the Jibun Bank Flash Japan Manufacturing Purchasing Managers' Index slipped to a seasonally adjusted 51.0 in September from the previous month's final of 51.5.

The headline figure was the slowest expansion since January 2021, although it stayed above the 50 mark that separates contraction from expansion.

It was pulled down by a downturn in output and overall new orders, both of which contracted for the third consecutive month. New orders fell at the fastest rate in two years.

According to Joe Hayes, senior economist at S&P Global Market Intelligence, the growth remains subdued as inflationary pressures and deteriorating global economic growth weigh on activity in both the manufacturing and services sectors.

Optimism about conditions for the year ahead fell in September, coming in at a five-month low due to the depreciation of Japan and the US, which came in at a five-month low.

The weakness we've seen year-to-date in the yen continues to push up price pressures, with companies struggling to pass on these higher cost burdens to clients, Hayes said.

The survey also showed that the PMI Index of the Jibun Bank Flash Services returned to expansion, coming in at a seasonally adjusted 51.9 in September from August's 49.5 final.

The PMI of the Jibun Bank Flash Japan Composite, which was estimated by using both manufacturing and services, also returned to growth, rising to 50.9 from the previous month's final of 49.4.