Flash readings of manufacturing costs in Australia and Japan soared in March after Russia’s invasion of Ukraine triggered turmoil in commodity and energy markets.
The gauges are an early indication of how the conflict may spillover into economies across Asia, a net energy importer, and add fresh pressure on the world’s top manufacturing base, which was already grappling with supply chain snarls and rising costs.
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While Japan’s March flash purchasing managers’ index rose to 53.2 from 52.7 the previous month, input prices increased at the fastest in almost 14 years, according to compilers au Jibun Bank and S&P Global. New orders fell to their lowest since September.
“Despite falling infection rates caused by the omicron variant, Japanese private sector companies reported softer optimism,” Usamah Bhatti, economist at S&P Global, said in a note, adding that positive sentiment was the weakest in 14 months amid concerns of the impact from the crisis.
The release came as Bank of Japan board member Goushi Kataoka said attention should be paid to upside risks of inflation stemming from higher raw material costs.
In Australia, price pressures mounted in March with both input cost and output price inflation hitting records, while overall sentiment remained positive. Costs for fuel and raw materials, as well as wages, were higher, reflecting both the Ukraine conflict and flooding in Australia, according to S&P Global.
“This will be worth watching going forward with business confidence among private sector firms clearly hit by concerns over rising costs,” Jingyi Pan of S&P Global said in a release.
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