A worker walks close to a factory in the Keihin Industrial Zone in Kawasaki.
The private survey showed that Japan's factory activity contracted for a third consecutive month in January, although manufacturers' outlook remained positive on improved supply and price conditions.
Japanese companies are facing calls for higher wage hikes at spring labour talks to counter inflation and support the consumption-led recovery in the world's third-largest economy, as a result of worsening global economic conditions.
The Jibun Bank Japan Manufacturing Purchasing Managers' Index was 48.9 in January, unchanged from the flash reading and the last month's final figure, which was the lowest level since October 2020.
Tim Moore, economics director at S&P Global Market Intelligence, said that the subdued global economic conditions continued to hold back customer demand across the Japanese manufacturing sector.
The factory output figures for December were released on Tuesday.
The S&P survey shows that output and new orders contracted for a seventh consecutive month in January, although at a slower pace than in the previous two months.
Supplier delays were the least prevalent since February 2021, suggesting an improvement in the tight supply of parts such as semiconductors. Input and output price inflation were the slowest in 16 months.
Moore said that there was a chance that a sustained improvement in supplier performance, along with a reduced headwind from the Pandemic, would support a further upturn in business confidence at the beginning of 2023.
Three times as many manufacturers in the survey expect production to expand in the next 12 months as those that forecast a contraction, according to Moore.
The data showed that the subindex gauging respondents' future output rose to a three-month high.