The flash reading is here:
The 'final' has confirmed the sharpest fall in over two years.
Commentary from the report:
- “December PMI data saw the Japanese manufacturing sector slip further into contraction territory in the final month of 2022. The downturn was largely centred around the current demand environment which is weak both internationally and domestically. Order book volumes contracted solidly and faster than paces recorded over much of the past two-and-a-half years while new export orders decreased for the tenth month in a row. Firms reportedly mirrored the picture for demand in their production volumes, as indicated by a solid reduction in output in December.
- “At the same time, forward looking indicators are increasingly painting a gloomier picture for Japan’s manufacturing sector in the future. Companies have cut back input buying sharply, and business sentiment waned to a seven-month low.
- “That said, there were some more encouraging aspects within the latest survey data. There were further signs of improvement on supply and cost pressures. Vendor performance deteriorated at the softest rate since February 2021 while input cost and charged price inflation dipped to 15- and nine- month lows, respectively.”
This is not very encouraging report. If the Bank of Japan does 'pivot' and dial back on some of its very easy monetary policy it'll make life a little more difficult for manufacturers (rating the cost of funding at the margin). Any BOJ change is unlilelyt before April, so perhaps the economic picture may have brightened a little by then.
