TOKYO, Sept 1 (Reuters) – Japan’s manufacturing sector picked up in August as new business grew at the fastest pace since January 2018 on solid demand for semiconductors and AI-related products, a business survey showed on Tuesday.
• The S&P Global Japan Manufacturing Purchasing Managers’ Index (PMI) rose to 54.9 in August from 54.5 in July, its highest since April.
• While it was below a flash reading of 55.1, it marked the eighth consecutive month of expansion. A reading above 50.0 indicates expansion, while below that level signals contraction.
• “Overall, the sector looks well placed to sustain its strong performance, particularly given demand linked to AI-related sectors,” said Annabel Fiddes, economics associate director at S&P Global Market Intelligence.
• Output rose for an eighth straight month. The pace eased only slightly from July’s near 12-year record and was the second-fastest since February 2014, thanks to improved market conditions, new product releases and higher volumes of incoming work.
• Export orders also increased at the quickest pace since the start of 2018 on stronger demand from North America, Southeast Asia and China.
• Manufacturers raised staffing levels for a 21st consecutive month, and the rate of job creation was the fastest since February 2018. Backlogged work increased for an eighth straight month, with the pace of accumulation the second-quickest since February 2014.
• Cost pressures eased for a second month, with input price inflation slowing to its weakest since March. Selling price inflation also softened to the lowest since April.
• Price pressures remained historically elevated, however, with higher raw material and oil costs from the conflict in the Middle East, supplier bottlenecks around the Strait of Hormuz and a weak yen, Fiddes said.
• Firms were more optimistic about the year-ahead outlook, with confidence rising to a six-month high and staying above the long-run trend. Companies attributed the positive sentiment to stronger market conditions, new product launches and demand for semiconductors and AI-related technology.
(Reporting by Satoshi Sugiyama; Editing by Jacqueline Wong)
