Zhitong Finance APP reports that the business survey released on Monday revealed the latest dynamics of the Japanese economy in December: manufacturing activity continues to shrink, having entered its sixth month of contraction, while the service sector maintains a growth trend, further highlighting Japan's increasing reliance on its service industry. Although Jibun Bank's preliminary manufacturing purchasing managers' index (PMI) for Japan slightly decreased from 49.0 in November to 49.5 in December, the decline has narrowed; however, the index has remained below the neutral line of 50.0 since June, indicating that manufacturing activity is in a contraction Range.

Specifically, S&P Global Market Intelligence economist Usama Batty pointed out that the demand differentiation between the service and manufacturing sectors has intensified, with new business growth in the service sector reaching the fastest pace in four months, while commodity producers face a significant decline in Orders. Business confidence in the manufacturing sector has fallen to the lowest point since May 2022, while input inflation accelerated to its highest level in four months, with output prices also soaring to the highest point since July, highlighting the ongoing cost pressures on businesses.

In contrast, the service sector has displayed a different picture. Jibun Bank's service sector PMI preliminary value rose from 50.5 in November to 51.4 in December, reaching a four-month high. Despite the strengthened economic growth momentum, issues related to labor shortages and rising costs have led to a decline in business confidence. The rise in input costs has pushed average selling prices to increase at the fastest rate in eight months.

Overall, Jibun Bank's composite PMI for Japan (covering both manufacturing and services) for December is 50.8, up from 50.1 the previous month. In addition, the quarterly Tankan survey released by the Bank of Japan on Friday also indicated that large manufacturers' confidence has slightly improved, and non-manufacturers remain optimistic about their business conditions over the past three months (up to December). However, weak global demand and the tariff increase threats proposed by the elected President of the USA, Donald Trump, cast a shadow on businesses' commercial outlook for the next three months, with firms generally expecting business conditions to worsen.

Editor/ping