According to the latest survey data, manufacturing activity in Japan significantly slowed down in March. According to data released by au Jibun Bank and S&P Global Market Intelligence, Japan's manufacturing Purchasing Managers' Index (PMI) for March fell from 49.0 in February to 48.4, hitting a 12-month low.

Although this data is higher than the expected 48.3, it is still below the threshold of 50 for the ninth consecutive month, indicating that Japan's manufacturing activity continues to contract.

Annabel Fiddes, Deputy Director of Economics at S&P Global Market Intelligence, said, "The further decline in production and new order indices indicates weak domestic and international market demand, especially in the context of increasing uncertainty in the global economic and trade environment, which still casts a shadow over the prospects of the manufacturing industry

The production and new order index of Japan's manufacturing industry have been in a contraction state for several consecutive months, with the largest decline in the production index in March in a year. The new order index has shrunk for the 22nd consecutive month, and new export orders have also declined.

According to the survey, manufacturers have pointed out that weak demand from key markets such as major Asian countries and the United States has further exacerbated the decrease in orders.

Despite weak demand, the job market is showing positive signs. Japanese manufacturing companies increased their recruitment numbers in March, the largest increase in three months. Some companies indicate that increasing recruitment is to fill vacant positions or to anticipate future demand growth.

However, the high cost pressure still troubles enterprises, with significant increases in labor, material, energy, and transportation costs, especially the impact of unfavorable exchange rates, making enterprises face greater financial pressure.

Annabel Fiddes added, "The survey results in March showed that the manufacturing industry is facing exceptionally strong increases in input costs and sales prices, which means that inflationary pressures within the industry remain severe, and companies have to pass on these costs to consumers

US President Trump announced last week that he will impose a 25% tariff on imported cars starting from April 3rd, a decision that could have a significant impact on Japan's manufacturing industry and further exacerbate downward pressure on the Japanese economy.

The market is generally concerned that this move may trigger new trade tensions, which could drag down global economic growth, especially in Japan, which is highly dependent on trade.

Editor's viewpoint:

The pressure faced by Japan's manufacturing industry reflects the profound impact of global economic uncertainty and trade tensions on the economy. Against the backdrop of a global economic slowdown and intensified trade concerns, the recovery process of the Japanese economy may become even more difficult.

With insufficient domestic demand in Japan and weak external market demand, there is still significant uncertainty about whether manufacturing activity can rebound in the coming months. In this context, policymakers may need more stimulus measures to cope with a possible economic slowdown.