Factory activity in Japan declined at the fastest pace in 26 months

According to a corporate survey released on Friday, manufacturing activity in Japan contracted at the fastest pace in December. This downward trend was recorded for the first time in more than two years due to weak demand and persistent price pressure. 

While the service sector bounced back after the opening of tourism, weak manufacturing activity still overshadowed Japan's recovery prospects. This is due to the companies entering labour negotiations, where wage increases are considered necessary for economic growth after the pandemic.

Japan's Jibun Bank Flash Manufacturing Purchasing Managers’Index (PMI) fell to a seasonally adjusted 48.8 in December. Previously, the index for November came in at 49.0. Thus, the index is below 50 for a second month in a row  — and if the figure were above this level, an increase in volumes could be recorded. Accordingly, the fall is considered to be the sharpest since October 2020, as at that time the index was at 48.7.