TOKYO (Reuters) – Japan’s manufacturing activity grew at the weakest pace in three months in May, as China’s heavy-handed coronavirus curbs aggravated supply disruptions and raised risks for the economic outlook.
Manufacturers reported a renewed rise in input costs due to higher prices of commodities and materials, including fuel and semiconductors, as the fallout from China’s lockdowns and the Ukraine conflict pressured the economy.
The final au Jibun Bank Japan Manufacturing purchasing managers’ index (PMI) released on Wednesday fell to a seasonally adjusted 53.3 in May from the prior month’s 53.5 final, the slowest pace since February. The 50-mark separates contraction from expansion.
“Both output and new orders rose at softer rates, with the latter rising at the weakest pace for eight months amid sustained supply chain disruption and raw material price hikes,” said Usamah Bhatti, Economist at S&P Global Market Intelligence.
“Disruptions were exacerbated by renewed lockdown restrictions across China, and contributed to a further sharp lengthening of suppliers’ delivery times.”
The survey showed new overseas orders shrank at the fastest pace since July 2020, while manufacturers’ input prices jumped at the fastest pace since August 2008.
Manufacturers became slightly more optimistic about output conditions for the next 12 months on hopes that the coronavirus pandemic and the Ukraine conflict will end and allow supply chains to normalise, the survey showed.
“This is in line with an estimated 2.9% increase in industrial production in 2022,” said Bhatti.
(Reporting by Daniel Leussink; Editing by Sam Holmes)