Japanese manufacturing hits 45-month high in February

Investing.com – According to the latest Purchasing Managers’ Index data from S&P Global, Japan’s manufacturing sector showed its strongest momentum in nearly four years in February, with production, new orders, and employment expanding at the fastest pace since January 2022.

The S&P Global Japan Manufacturing PMI rose from 51.5 in January to 53.0 in February, reaching the highest reading since May 2022.

The index measures the monthly change in manufacturing performance; a reading above 50 indicates expansion.

Manufacturing output grew at a solid pace, marking the fastest increase in over four years, with companies reporting higher new business volumes.

Total new orders expanded at the fastest rate since January 2022, driven mainly by improved global demand conditions and new product launches.

Growth in new export business reached its highest since June 2021, with companies reporting increased demand from key regions including Europe and other parts of Asia.

Employment in Japan’s manufacturing sector increased for the 15th consecutive month. The pace of employment growth accelerated to its fastest in over four years, as companies added staff to expand capacity amid ongoing sales growth.

Business conditions improved in the capital goods and intermediate goods sectors, but the situation for consumer goods manufacturers remained stagnant.

Purchasing activity continued to grow for the second consecutive month in February, at the fastest rate since May 2022, as companies responded to rising production demands.

However, companies remained cautious about inventory levels, with both pre-production and post-production inventories slightly declining.

Supply chain pressures intensified, with supplier performance deteriorating at a faster rate. Companies reported shortages of supplier inventories and personnel, as well as transportation delays affecting delivery times.

Input costs further increased in February due to rising prices for raw materials, labor, and transportation, coupled with a weak yen exchange rate. Although input price inflation slowed compared to January, it remained high by historical standards. Companies responded by raising selling prices, but inflation in charges slowed from the 19-month high seen in January.

Business confidence in the 12-month production outlook rebounded to its highest level since June 2024.

Companies expressed optimism that further recovery in global demand and new product launches would support growth, with some firms feeling optimistic following the recent re-election of Prime Minister Fumio Kishida’s government.

This article was translated with the assistance of artificial intelligence. For more information, please see our Terms of Use.