© Reuters. FILE PHOTO: Nissan Motor Co., Ltd’s Universal Powertrain Mounting System with a two-layer pallet structure, compatible with EV, e-POWER (HV) and gasoline vehicles is pictured in Kawachi-gun, in Tochigi prefecture, Japan October 8, 2021. REUTERS/Maki Shira
TOKYO (Reuters) – Japan’s manufacturing activity expanded for an 11th straight month in December, but at a slightly slower pace than the previous month as weaker output and new order growth softened.
Activity in the services sector also grew at a slower pace, slipping from a more than two-year high recorded in the prior month, suggesting it will take time for the sector to fully recoup the negative impact from the coronavirus pandemic.
The au Jibun Bank Flash Japan Manufacturing Purchasing Managers’ Index (PMI) fell to a seasonally adjusted 54.2 from a final 54.5 in the previous months.
“Manufacturers and services companies signalled softer rates of output and new order growth compared to November,” said Annabel Fiddes, economics associate director at IHS Markit, which compiles the survey.
“Cost pressures also remained more acute at manufacturers, with average input prices rising rapidly amid reports of higher material costs and supplier shortages.”
Manufacturers reported a decline in suppliers’ delivery times and stocks of purchases and a slowing expansion of new export orders.
Both manufacturers and service-sector firms became less optimistic about business conditions in the 12 months ahead, IHS Markit’s Fiddes said.
“Concerns over supply chains, rising costs and the unpredictable nature of the pandemic (including new strains) pushed overall optimism down to the lowest in four months,” she said.
The au Jibun Bank Flash Services PMI Index dropped to a seasonally adjusted 51.1, a nearly two point drop from the prior month’s final of 53.0.
The au Jibun Bank Flash Japan Composite PMI, which is calculated by using both manufacturing and services, dropped to rose to 51.8 from November’s final of 53.3.