Manufacturing is the most affected sector by the global trade war

Japanese Manufacturing Sector Contracts Further in December

Posted Monday, January 6, 2020 by
Arslan Butt • 1 min read

Manufacturing activity in Japan remained in contraction during December, with the pace of shrinking rising when compared to the previous month, over prolonged reduction in demand both overseas and domestic. The Jibun Bank Final Japan Manufacturing PMI reading fell to a seasonally-adjusted 48.4 in December from a prelim reading of 48.8 and a final reading of 48.9 in November.

Japan’s manufacturing sector has remained in contraction through 2019 over the prolonged US-China trade war and subsequent slowdow in global economic growth. The export-oriented economy of Japan has suffered significantly due to the trade war as China is one of its key trading partners.

The contraction in the manufacturing sector was driven by output falling to the lowest level since March even as new exports remained weak as demand from China fell. Last month, the BOJ indicated that Japan’s factory output is expected to witness continued strain even as the overall economy is set to witness moderate growth in 2020.

This was the eighth consecutive month when the manufacturing PMI for Japan remained under the 50-threshold, indicating contraction. The last time manufacturing remained in contraction for such an extended period was back in 2012-13 when the sector witnessed contraction for nine months.

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