Staff of Reuters Read for 2 minutes (Reuters) – TOKYO, July 1 (Reuters) – In June, manufacturing activity in Japan grew at its weakest rate in four months, as manufacturers’ momentum slowed from the previous month, when output was hurt hard by a global scarcity of high-tech semiconductors. Firms are under pressure from increasing input costs, and a fast rebound in other major global economies is pushing up raw material prices, resulting in a slower expansion of manufacturing activity. On a seasonally adjusted basis, the final au Jibun Bank Japan Manufacturing Purchasing Managers’ Index (PMI) in June fell to 52.4 from 53.0 the previous month, marking the lowest level since February. “The rate of growth has slowed since May, owing to softer gains in both production and new orders,” said Usamah Bhatti, an economist at IHS Markit, the survey’s compiler. “Manufacturers expressed alarm about the ongoing supply chain disruption, which has resulted in substantial increases in raw material prices amid severe shortages.” The final number, however, was an improvement over the 51.5 flash reading issued last week, demonstrating industrial activity’s resilience in the face of the chip scarcity for the time being. The PMI poll found that manufacturers’ optimism for the coming year reached a new high, indicating that they are hopeful that conditions will improve in the long run. However, output and overall new orders grew at a slower pace in June, with companies citing health-care-related restrictions as well as the chip scarcity as headwinds. Official data released on Wednesday showed that Japan’s industrial output fell for the first time in a year in May, as the semiconductor supply shortage wreaked havoc on the auto industry. Input prices grew for the 13th consecutive month, according to the PMI survey, due to increases in raw material prices, such as chips and metals. “Business cost burdens increased at their fastest rate since March 2011,” Bhatti noted, “which has largely translated to greater costs for clients to cover margins.” Daniel Leussink contributed reporting, and Sam Holmes edited the piece./n
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