Economic calendar in Asia Monday December 30 – Japan PMI

Jibun Bank Final PMI from Japan for December is due today.

• Flash Manufacturing December: 49.4 (in contraction for 6 straight months.)
• November Final 49.2

Background to this is that Japan’s manufacturing sector experienced a consistent contraction over the previous three months, as indicated by the Jibun Bank / S&P Global Manufacturing Purchasing Managers’ Index (PMI):

• September 2024: The PMI stood at 49.7, signaling a contraction in manufacturing activity.

• October 2024: The PMI declined to 49.2, marking the sharpest deterioration in the sector’s health in three months. This downturn was attributed to renewed declines in investment goods and softer falls in intermediate goods, with consumer goods experiencing broadly stagnant conditions.

• November 2024: The PMI further decreased to 49.0, the lowest level since March, indicating a modest yet stronger contraction. This decline was driven by sustained reductions in new orders and output, with subdued demand from both domestic and international markets. Notably, firms reduced employment levels for the first time since February, and backlogs of work fell significantly.

These figures reflected ongoing challenges in Japan’s manufacturing sector, including weak demand in key industries such as semiconductors and automobiles, as well as persistent cost pressures from labor, logistics, and raw materials. Despite these challenges, manufacturers have maintained a degree of optimism about future business prospects, supported by expectations of new product launches and a broader economic recovery.

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The latest from Japan (these from Friday):

Wrap highlights:

• December inflation in Tokyo accelerated for a second month, the government temporarily phased out utility subsidies;
• the ‘Summary of opinions’ from the Bank of Japan December meeting (when the bank maintained its policy rate at 0.25%) showed the policy board members remaining optimistic in its assessment that the economy and inflation are moving in line with its projections – amidst caveats of course – supporting market expectations for a near-term rate hike, perhaps as soon as the January 23-24, 2025 meeting.

More:

• Japan finance minister Kato – alarmed by FX moves, driven by speculators

• Japan inflation data and BoJ December summary raise expectations of a January rate hike

• BoJ December 2024 Summary of Opinions – ‘Gradual increase in CPI’
• Japan Retail sales for November: +2.8% y/y (expected +1.6%)
• Japan Industrial Production for November (preliminary): -2.3% m/m (expected -3.4%)
• Japan data: October Unemployment rate 2.5% (expected 2.5%)
• Tokyo area December inflation data: Headline 3.0% y/y (expected 2.9%)

This article was written by Eamonn Sheridan at www.forexlive.com.