Japan's exports fell in July for the first time in nearly 2-1/2 years, driven by weak demand for light oil and chip-making equipment and raising concerns about a global recession as the demand in key markets such as China weakens.
Profits at China's industrial firms fell for a seventh consecutive month in July, declining by 6.7% year-on-year, as weak demand and a faltering post-pandemic recovery continue to squeeze companies in the world's second-largest economy.
China's factory activity contracted for the fifth consecutive month in August, indicating that the slowdown in the country's economy has not yet reached its lowest point.
Japan's factory output fell more than expected in July, indicating a challenging start to the second half of the year for manufacturers amid concerns about China's growth and the global economy. Output declined 2.0% in July from the previous month, driven by decreased domestic and overseas orders, particularly in the electronic parts and production machinery sectors. However, car production rose 0.6% due to improved supply chain conditions.
Big Japanese manufacturers and the services sector in Japan are experiencing a decline in confidence, with concerns of a slowdown in China's economy affecting global and domestic growth, according to a Reuters poll. The weak sentiment in the business sector raises doubts about the ability of exports to drive economic recovery amid weak domestic demand. Many companies cited high input costs and weak demand as contributing factors, along with geopolitical risks and tensions between the US and China.
Japan's core machinery orders fell more than expected in July, reflecting manufacturers' reluctance to invest due to sluggish global growth and weakness in China, signaling challenges for the country's economy.
Japan's exports to China declined for the ninth consecutive month in August, dropping 11%, due to weak demand and the suspension of seafood imports following the Fukushima Daiichi nuclear plant incident.
Asia-Pacific markets fell as the Bank of Japan kept rates unchanged and noted a "moderate recovery" in the economy, while Japan's private sector activity expanded at its slowest pace since February and the country's August inflation rate remained above the BOJ's target for the 17th straight month.
Japan's core inflation slowed for the third consecutive month in September, mainly due to falling fuel costs, providing some relief for the fragile economic recovery; however, factory output remained flat in August, indicating the negative impact of weak global demand and China's economy.
China's factory activity expanded at a slower pace in September, with sluggish external demand weighing on the outlook, although output increased, according to a private-sector survey.
Japan's service sector experienced the slowest expansion in September since the beginning of the year, as shown by a private survey, indicating potential challenges for the country's economic recovery heavily reliant on domestic demand.
Most Japanese companies expect a continued slowdown in China's economy until 2025, with many looking to shift production to other markets, according to a Reuters poll, despite recent signs of recovery in China's economic activity.
China's exports and imports declined at a slower pace in September, indicating a gradual stabilization in the economy, although challenges remain in the face of deflationary pressure, a property crisis, global slowdown, and geopolitical tensions.
Japan's factory activity contracted for the fifth consecutive month in October, while the service sector experienced its slowest growth this year, indicating growing uncertainty about the country's economic outlook.
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