Japan factory activity contracts more slowly in December

(Sharecast News) - Japan's factory activity contracted at a slower pace in December, suggesting the sector could be moving closer to stabilising after months of declines. The final au Jibun Bank Japan manufacturing purchasing managers' index (PMI) rose to 49.6, the highest in three months and slightly above the flash estimate of 49.5.

While still below the 50-point threshold that separated growth from contraction, it was still an improvement from November's reading of 49.0.

The easing contraction was reportedly driven by slower declines in both production and new orders.

According to S&P Global Market Intelligence, subdued demand in domestic and overseas markets, particularly in the semiconductor sector, continued to weigh on new orders, which fell for the 19th consecutive month.

However, the pace of the decline moderated, with manufacturers expressing optimism about future business prospects, citing plans for new product launches and mass production.

Employment in the manufacturing sector rebounded in December, reaching its highest level since April as firms increased hiring to address labour shortages and prepare for anticipated demand.

Input prices surged at the fastest rate since August, fueled by rising raw material and labour costs, as well as the impact of a weaker yen.

In response, firms raised output prices at the sharpest pace in five months to manage inflationary pressures.

Reporting by Josh White for Sharecast.com.