Japan final manufacturing PMI (December 2024 ): 49.6 (prior 49.0)


Manufacturing PMI from Japan, final for December 2024 improves from the flash reading, and from November to 49.6, still in contraction:

From the report (in brief):

  • Manufacturing Economy: Japan’s manufacturing economy showed signs of stabilisation towards the end of 2024, with softer declines in new orders and output.

  • Employment: Employment increased for the 9th time in 10 months, reversing the slight dip seen in November and reaching the strongest level since April.

  • Outstanding Business: There was a continued sharp decline in outstanding business due to weak new order growth.

  • Input Price Inflation: Input price inflation rose to a four-month high, driven by higher raw material prices and a weak yen. As a result, manufacturers raised their prices at the fastest rate in five months.

  • Purchasing and Stocks: Purchasing activity decreased for the third consecutive month, and stock levels were depleted at the fastest rate since January 2021.

  • Lead Times: There was only a marginal increase in lead times for inputs, despite ongoing delivery delays and shortages, with material availability improving.

  • Future Confidence: Manufacturers were optimistic about the future, citing expectations of new product launches, business expansion, and recovery in key markets like semiconductors and automobiles.

  • PMI: The Japan Manufacturing PMI for December was 49.6, indicating a slight contraction in manufacturing.

  • Output and Demand: Output decline softened, driven by muted demand. However, there were signs of stabilization in new orders and a slight recovery in new export demand, particularly from markets like China and the US.

  • Employment Growth: Employment growth resumed, reaching the highest level since April, supporting increased manufacturing capacity.

USD/JPY tracking more or less sideways under 158:

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As background to this, a summary of the previous three months, when Japan’s manufacturing sector experienced a consistent contraction, as indicated by the Jibun Bank / S&P Global Manufacturing Purchasing Managers’ Index (PMI):

  • September 2024: The PMI stood at 49.7, signaling a contraction in manufacturing activity.

  • October 2024: The PMI declined to 49.2, marking the sharpest deterioration in the sector’s health in three months. This downturn was attributed to renewed declines in investment goods and softer falls in intermediate goods, with consumer goods experiencing broadly stagnant conditions.

  • November 2024: The PMI further decreased to 49.0, the lowest level since March, indicating a modest yet stronger contraction. This decline was driven by sustained reductions in new orders and output, with subdued demand from both domestic and international markets. Notably, firms reduced employment levels for the first time since February, and backlogs of work fell significantly.

These figures reflected ongoing challenges in Japan’s manufacturing sector, including weak demand in key industries such as semiconductors and automobiles, as well as persistent cost pressures from labor, logistics, and raw materials. Despite these challenges, manufacturers have maintained a degree of optimism about future business prospects, supported by expectations of new product launches and a broader economic recovery.

For Japan’s Services PMI over the past three months:

  • September 2024: The Services PMI was at 53.1, indicating solid expansion in the services sector.

  • October 2024: The index declined to 49.7, signaling a contraction—the first since June. This downturn was attributed to slower sales and a renewed decline in export orders. Business confidence also dropped to a 31-month low.

  • November 2024: The Services PMI rebounded to 50.5, reflecting a modest expansion. This improvement was driven by increased new business and employment, with outstanding business growing at the fastest rate in eight months. However, inflationary pressures persisted due to higher costs in fuel, labor, and logistics.

These fluctuations highlight the services sector’s sensitivity to domestic and international demand, as well as cost pressures impacting business sentiment and activity levels.