Japan September factory growth slows to 6-month low, PMI shows

TOKYO, Oct 1 (Reuters) - Japan's manufacturing ‌sector expanded ​at its ​weakest pace in six months in September as output and new order growth slowed, a business survey showed on Thursday.

• The ‌S&P Global Japan Manufacturing Purchasing Managers' Index (PMI) eased to 54.1 in ⁠September from 54.9 in August, a survey by S&P Global showed, matching a flash reading.

• ‌Although it slowed down from ‌the previous month, it marked the ninth consecutive month of expansion. A reading above 50.0 indicates expansion, while below that level signals contraction.

• "Firms signalled ​slower increases in output and new orders, as some companies mentioned that clients were adjusting inventories as an earlier period of stock accumulation began ⁠to unwind," said Annabel Fiddes, economics associate director at S&P Global Market Intelligence.

• While production rose strongly, its ​pace eased to a three-month low. Total new orders similarly increased at a slower rate, with the expansion the weakest ​in four months after August's multi-year record.

• ‌Overseas demand remained firmer. New export orders rose for a ninth straight month and the pace of growth was the ⁠second-sharpest since January 2018, supported by stronger demand across Asian economies and improved sales to the US.

• Employment increased for a 22nd consecutive month and the pace stayed close ⁠to August's recent high, making it the second-fastest since April 2018. Higher staffing and slower ​sales growth helped reduce backlog growth to a modest six-month low.

• Cost pressures remained elevated even as they eased. Input cost inflation slowed to a six-month low, while firms continued ‌to raise selling prices at one of the sharpest rates seen since late 2022.

• Manufacturers remained optimistic that output would ‌rise over the next 12 months, with sentiment little changed from August and ⁠above the long-run average. Firms cited ‌demand related to semiconductors ​and AI-related technology, though the survey flagged supply disruption, component shortages and rising costs as risks.

(Reporting by Satoshi Sugiyama; Editing by ‌Jacqueline Wong)

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