Japanese manufacturing production contracted for the first time in nearly three years in February, as exports declined amid slower sales to China, according to the final reading from an industry gauge.
The Nikkei-Markit manufacturing purchasing managers’ index fell to 48.9 in January, down from the final reading of 50.3 in January and sliding below the 50-point line separating expansion from contraction for the first time since August 2016.
Joe Hayes, an economist at IHS Markit, noted “sharper reductions in output and demand” and said global trade frictions and weak domestic manufacturing demand posed “considerable risks to Japan’s goods producers”.
“With the consumption tax hike set to come into play later this year, weak domestic demand will only heighten fears that the economy could be poised for a downturn,” Mr Hayes said.
Earlier data from Japan showed exports from Asia’s biggest advanced economy fell 8.4 per cent in January compared with a year earlier, which was the steepest decline since October 2016, and with China the biggest culprit.
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