On Tuesday, the Japan's Cabinet office released december's Final Manufacturing PMI data at 54.3. That was Slowing from the previous month's level of 54.5. 

Japan's industrial and business sectors have benefited in recent monthsawad from the easing of the COVID pandemic that prompted a recovery in economic activity. 

However, the supply chain problems and raw material prices overshadow Japan's manufacturing outlook. Broadly speaking, the consumer demand is positive. 

The domestic market was supported by a gradual recovery from the impact of the pandemic that briefly pushed back Japan's manufacturing sector in the third quarter of 2021. 

Automotive Products Orders Decrease

The recovery in spare parts supply actually helped to reduce the impact of surging raw material prices and global trade chain bottlenecks that have occurred since 2020. 

Nevertheless, the orders for Japanese automotive products and motor vehicles from abroad remain weak. This is in connection with the sharp increase in COVID cases in some Japanese export destination countries.

The examples are like the South Korea, United States, and Europe. The Economists see that the conditions facing by the Japanese manufacturers during the last quarter of last year were one of the worst performances.

That is especially since the Manufacturing PMI survey was held. While still optimistic, Japanese manufacturers are still wary of the continued impact of the pandemic.

They are also worrying about the global supply chain disruptions that have pushed producer confidence to its lowest level since August 2021.

USD / JPY Pair Continues It’s Increase

Following the release of Japanese Manufacturing PMI data this morning, the yen's currency movements were observed to weaken against the US Dollar. The USD/JPY pair was in the range of 115.35.

It means that pair was strengthening by 0.04% on a daily basis. Technically, the U.S. dollar is currently on track to strengthen the five consecutive sessions.

The Higher United States bond yields and easing risk off sentiment make the USD is more attractive in the eyes of investors. They may buy that currency as soon as possible.

Meanwhile, On Tuesday, the China's National Bureau of Statistics released their Caixin Manufacturing PMI data that rose from 49.9 to 50.9 in December. 

China Small – Middle Manufacture Sector Shows An Impressive Increase 

This figure is relatively positive because it marks the return of manufacturing activity to the path of expansion, while chalking up growth at the fastest pace in the last six months

China's small-to-medium-sized manufacturing sector posted a fairly impressive gain during December. That was driven by a rise in production as domestic market demand recovered. 

In addition, the reduced pressure on raw material prices helped trigger the activity of China's industrial sector. Supply was strong and market demand rebounded. 

With the reduced supply constraints, manufacturing output increased for the second month in a row at a faster pace. However, a weak labor market and business confidence still leave uncertainty among businesses. 

The Economy Recovery Is Still Not Stable

The survey further showed that the new export order sub-index declined, as did the labor market which contracted to a record low since February 2021. This condition caused the manufacturing index to post only limited increases.

A labor market that is still under pressure and business sentiment that looks not so good suggests that actually the China's current economic recovery is unstable. 

Pandemics repeatedly emerged and sluggish overseas demand was a trigger factor in the emergence of instability. Policymakers should focus on the job recovery efforts for small-scale businesses.

China's economy has been slowing since the start of the summer last year after making a rapid recovery from the effects of the pandemic. Some analysts expect the China's GDP to grow below 4.0 percent in the fourth quarter of 2021.