Manufacturing activity in Japan declined for the first time in almost 2 years

Japan's manufacturing activity contracted in November for the first time in nearly two years, according to a private study. This contraction happened because of a sharp drop in demand and output, which occurred due to a slowdown in the global economy and still-elevated inflationary pressures.

Thursday's survey data shows the world's third-largest economy will remain underpowered for a bit longer. The reasons for this are softening demand conditions as well as the fact that China is struggling with a new spike in COVID-19 cases.

The au Jibun Bank Manufacturing Purchasing Managers' Index (PMI) fell to a seasonally adjusted 49 in November from 50.7 in October and was below the flash reading of 49.4.

This is the weakest level since November 2020, marking the first move below the 50 mark in almost two years, which is the neutral level separating contraction from expansion.

Cooling market conditions, sustained pressure on prices and weak underlying demand both internationally and domestically were the key factors behind the decline in manufacturing activity, said Laura Denman, an economist at S&P Global Market Intelligence who compiled the survey.