Japan's Factory Activity Contracts At Milder Pace, PMI Shows

Japan's factory activity contracted at a slower pace in August thanks to a recovery in output and new orders, offering some hope for an economy that is starting to stabilize, Reuters reported.

The final au Jibun Bank Japan Manufacturing Purchasing Managers' Index (PMI) rose to 49.8 in August, compared to 49.1 in July.

The final au Jibun Bank Japan Manufacturing Purchasing Managers' Index (PMI) rose to 49.8 in August, compared to 49.1 in July, and was up from 49.5 in the flash reading. Despite the improvement, it remained below the 50.0 threshold that separates growth from contraction for the second consecutive month.

Usamah Bhatti of S&P Global Market Intelligence commented, "The headline reading came close to stabilization during August amid a renewed rise in production and a softer fall in new order intakes."

The output subindex expanded to its highest level since May 2022, reversing the contraction seen in July. A recovery in new orders and the mass production of new products helped boost output.

However, new orders continued to shrink modestly, with tepid demand in both domestic and overseas markets.

Some firms cited overstocking and weak client investment as contributing factors. Meanwhile, sluggish demand from key export markets, such as China and South Korea, led to the lowest level of new exports in five months.