Tokyo — Japan’s manufacturing activities have grown at the fastest pace in about eight years in January, while cost pressures remained high as companies continued to face supply chain delays.
Supply chain disruptions have forced companies to build up their safety stocks. According to the survey, raw material holdings increased at the highest rate in nearly eight years.
The final au Jibun Bank Japan Manufacturing Purchasing Managers Index (PMI) for January rose to 55.4 on a seasonally adjusted basis, up from a preliminary figure of 54.6 and a final of 54.3 last month.
This is the fastest growth since February 2014, with manufacturing activity expanding for the 12th consecutive month.
“Japanese manufacturers are enthusiastically celebrating the New Year,” said Usamah Bhatti, economist IHS Markit, who summarized the survey.
“But while the supply chain turmoil remained widespread in early 2022, delivery times increased even sharper.”
Production also grew the fastest since February 2014, but surveys show that overall order growth has reached its highest level since April last year.
However, it also emphasized that continued cost pressures from supply problems are still hampered, as input price growth remained much higher than that of output prices.
However, production prices among manufacturers have risen at the strongest pace since July 2008, as companies have been seen passing additional costs on to their customers.
“The delay has led companies to increase their stockpile of both inputs and finished goods,” says Bati.
“Inventory of purchases increased at the second fastest rate in the history of research, but possession of finished goods increased at the fastest pace in nearly eight and a half years.”