The flash reading is here:
From the report. China problems, supply chain issues, high costs - none of this is surprising. The result is still a decent performance though:
- "Japanese manufacturers noted a softer improvement in the health of the sector for the second successive month in May. While pointing to a solid improvement overall, the latest Manufacturing PMI was the lowest recorded since February. Both output and new orders rose at softer rates, with the latter rising at the weakest pace for eight months amid sustained supply chain disruption and raw material price hikes.
- "Disruptions were exacerbated by renewed lockdown restrictions across China, and contributed to a further sharp lengthening of suppliers’ delivery times. The deterioration in vendor performance was the joint-quickest since last October and robust overall. Firms cited difficulties in sourcing and receiving raw materials as a key factor behind a steep expansion in safety stocks, with manufacturers indicating the second-fastest rise in pre-production inventories in the survey history.
- "Material shortages and logistical issues were also partly behind a sustained surge in costs. Average input prices rose at a substantial rate that was the fourth-highest on record. Firms widely attributed the rise to higher material and fuel costs, especially for oil and semiconductors.
- "Confidence regarding the year-ahead outlook strengthened however, underpinned by hopes that an end to the pandemic and Russia-Ukraine conflict would induce a broad recovery in demand and supply chains. This is in line with an estimated 2.9% increase in industrial production in 2022."
Bolding above is mine.