Japan’s factory activity declined in June, hitting a two-year low due to reduced new orders, as per a private survey on PMI.
The au Jibun Bank Japan Manufacturing PMI dropped to 52.7 in June, the lowest since June 2020. A reading above 50 signifies growth, below 50 indicates contraction.
In June, the new orders index fell to 49.3, showing weakened export demand. Output index also decreased to 53.2, while the employment index rose to 53.6.
Input prices surged at the fastest pace in almost two years, while output prices fell. Marcel Thieliant, senior economist at Capital Economics, highlighted the PMI’s decline, signaling a deeper manufacturing slowdown.
The decrease in new orders reflects China’s ongoing lockdowns, disrupting supply chains and dampening export demand. Worries arise over rising input prices leading to higher inflation and eroding corporate profits.
The Bank of Japan’s (BoJ) policy meeting on July 20-21 will consider the PMI data. The BoJ is expected to maintain its ultra-easy monetary policy, though economic data may prompt stimulus tapering.
