Japan’s factory activity growth hits 4-year high on stockpiling, PMI shows

TOKYO, May 1 (Reuters) – Japan’s manufacturing activity grew at its strongest pace in over four years in April, as companies ramped up production and stockpiled goods amid supply chain ​disruptions caused by the Middle East war, a private-sector survey ‌showed on Friday.

• The final S&P Global Japan Manufacturing Purchasing Managers’ Index (PMI) rose to 55.1 in April from 51.6 in March, marking the biggest expansion since January 2022. A reading above 50.0 indicates expansion, while below that level signals ‌contraction.

• ​Manufacturing output surged at the fastest rate since ⁠February 2014, up sharply ⁠from March, driven by higher new orders and efforts to build inventories due to uncertainty over the war in the Middle East.

• New orders rose at the quickest pace since January 2022, ​compared with a slower rate in March. Companies said concerns over future supply chain delays and price increases due to the ⁠Middle East conflict prompted customers to place ⁠new orders, with some also noting greater demand for ​AI-related technology.

• However, supply chains deteriorated at the steepest rate in ​15 years, with delivery times lengthening to the greatest extent ‌since April 2011 during the aftermath of the Tohoku earthquake. This was a sharp worsening from March.

• Input cost inflation surged to a three-and-a-half-year high, up from March, as companies reported higher prices for ⁠raw materials, oil and transport. Output prices rose at the fastest rate since November 2022, compared with a slower pace the previous month.

• Annabel Fiddes, ⁠Economics Associate Director ‌at S&P Global Market Intelligence, said: “This suggests the ⁠current boost to manufacturing could soon fade unless ​we see ‌reduced market uncertainty and more stable supply chain ​conditions, particularly ⁠if market demand weakens and stock-building activities start to reverse.”

• Business confidence regarding the year-ahead outlook slipped to its second-lowest level since June 2020, down from March, as uncertainty around the Middle East war and its impact on global economic conditions dampened forecasts.

(Reporting by Kaori Kaneko; Editing ​by Sam Holmes)