Japan’s au Jibun Bank Manufacturing PMI was revised up to 49.2 in October from an initial reading of 49.0, following September’s final figure of 49.7. Despite this slight increase, the PMI indicates a fourth consecutive month of contraction in factory activity. This decline marks the sharpest drop since March, highlighting ongoing challenges in the manufacturing sector.

Declining Output and New Orders

Factory output in Japan shrank at its fastest pace in six months, further reflecting the sector’s struggles. New orders fell for the seventeenth month in a row, with the latest decrease being the steepest in three months. The decline in export orders was particularly notable, as they dropped significantly due to weak demand from international markets.

Job Creation and Backlogs Stagnate

Job creation within the manufacturing sector has stagnated amid reduced capacity pressures. The decline in new orders has led to a sharp decrease in backlogs of work, dropping at the steepest rate in seven months. As companies adjust to the ongoing contraction, they are reassessing their workforce needs in light of current demand.

Mixed Signals in Pricing and Sentiment

On the pricing front, input cost inflation eased to a six-month low, while output price inflation accelerated. Despite these fluctuations, business sentiment remains relatively stable, although it is still close to September’s 21-month low. Concerns about the timing of a recovery from the current economic challenges continue to weigh on manufacturers as they navigate this difficult environment.