Overall operating conditions improved at the sharpest rate since December 2015, helped by stronger growth in both production and new orders. As a result, goods producers were more confident towards taking on additional workers, with the rate of job creation picking up to a 32-month high. Buying activity also rose at the quickest rate in nearly one year.

The headline PMI posted 52.4 in December, up from 51.3 in November, signalling a sharper improvement in manufacturing conditions in Japan. In fact, the latest reading was the highest since December last year and contributed to the strongest quarterly average since Q4 2015. The higher figure reflected increases in output, new orders and employment.