At the end of 2019, the Japanese manufacturing sector appeared to be on the verge of collapse. Experts recorded a significant economic downturn in the industry, which had been exacerbated amid a marked decline in output volumes.
In December last year, the Manufacturing Purchasing Managers' Index (PMI) in Japan slipped to 48.4 from November's reading of 48.9. According to IHS Markit, the preliminary figure was 48.8. Any reading of the index below 50 indicates a contraction of the manufacturing sector, while a reading above this threshold signals its expansion.
“Japan's manufacturing sector has ended 2019 where it started, stuck in contraction,” Joe Hayes, an economist at IHS Markit, said. Notably, Japan's manufacturing PMI index has remained below the reading of 50 for the eighth consecutive month.
According to analysts, output in Japan has fallen to its lowest level since March 2019 due to reduced demand and weak new export orders. There has been a decline in overall new orders and output throughout the whole year 2019, experts emphasize.
The manufacturing industry of Japan has proven to be the most heavily affected sector. Economists at IHS Markit believe that it has endured its worst performance in three years. Experts attribute this to weak demand affecting output volumes. As previously noted, a dramatic slowdown in industrial production in November 2019 raises the likelihood that the Japanese economy will contract in 2020.
