High rate of contraction in Japan’s manufacturing sector

An economic report published today showed the pace of contraction in Japan’s manufacturing sector during July is shrinking at a lower pace last month.

Japan’s Gibbon Bank Manufacturing Purchasing Managers Index fell in the current month to 49.4 points from 49.8 points last June.
A reading of more than 50 points indicates the growth of the sector’s economic activity, while a reading of less than 50 points indicates a contraction of activity.

The new production and demand indices in the manufacturing sector recorded a new decline in the current month, with the new orders index falling to its lowest in 4 months. The Production Supply Price Index (PPI) fell to its lowest level since February 2021 despite manufacturing companies’ trend to pass on a larger portion of the higher production cost to customers for the first time since April.

At the same time, the Gibbon Bank report noted that Japan’s service sector purchasing managers’ index fell from 54 points last month to 53.9 points during the current month.