Factory Activity of Japan drops eight consecutive months in December

Lower demand and extended output decline dragged Japan’s factory activity shrink to eight consecutive months in December. Fourth-quarter economic contraction looms around Japan’s economic zone.

From a 48.9 marker in November, the Jibun Bank Flash Japan Manufacturing Purchasing Managers’ Index (PMI) dipped to 48.8 (seasonally adjusted). This marks another below the 50.0 threshold level performance, indicating contraction (and dismissing expansion) for eight months in a row.

Once the final reading of Japan’s manufacturing activity is released early next year and stays below the 50.0 point level, Japan will post its longest contraction run since its previous 9-month record in February 2013.

“The most disconcerting takeaway from fourth-quarter survey data has been the marked loss of momentum in the service sector,” Joe Hayes, economist at HIS Markit said.

“It is now clear that the service sector is unable to offset the industrial weakness, which does not bode well for growth prospects in 2020.”