Japan’s manufacturing sector showed signs of a modest recovery in September 2024, as the Manufacturing Purchasing Managers’ Index (PMI) was revised to 49.7, up from an earlier estimate of 49.6. While still indicating contraction, this marks the softest decline since April, hinting at potential stabilization in the sector.

Despite the PMI remaining below the 50-mark that separates expansion from contraction, the revised figure signals a slower rate of decline for Japan’s manufacturing industry. September marks the third consecutive month of contraction, though production levels and new orders continue to fall.

Sharp Decline in Export Sales

One of the key drivers of this ongoing contraction is a significant drop in export sales, which fell at their fastest rate in six months. This highlights the continued pressure on Japan’s export-oriented economy due to global uncertainties.

Employment and Backlogs: Mixed Signals

The labor market offered some positive news, with employment seeing a slight uptick in September. However, backlogs of work continued to decrease, suggesting that demand remains subdued, and there is less pressure on production lines.

Outlook: Signs of Stabilization?

Although the manufacturing sector continues to contract, the slower pace of decline offers a glimpse of potential stabilization. With employment improving slightly and the contraction softening, Japan’s manufacturing industry may be positioning itself for a recovery in the coming months.