Japan’s manufacturing PMI improved for the second successive month in March. Manufacturers reported an increase in production and new orders volumes, with the quickest growth rate seen in the last 2-3 years. Employment stabilised with manufacturers adding capacity to clear rising backlog.
Amid optimistic sentiment, the Jibun Bank Japan Manufacturing PMI increased to 52.7 in March from 51.4 in the prior month indicating sustained recovery from the impact of COVID-19. The index indicates the highest improvement in Japan’s manufacturing sector since October 2018.
Manufacturers reported higher orders from key domestic industries including auto and semiconductors with an expansion in new order volumes. Demand for Japanese product recovered marginally in the overseas market with orders concentrated in major Asian nations including China.
In Japan, input costs rose at a robust pace amid higher raw material prices leading to a hike in the average output prices of manufactured goods as companies passed on cost increases to customers. Supply chain disruptions delays in arrivals leading to increased purchasing and a drawdown of existing inventories to complete orders. Business confidence remains positive buoyed by hopes of a successful vaccination drive.