Japan's manufacturing activity contracted at fastest pace in 30 months in February

Japan's manufacturing activity contracted at fastest pace in 30 months in February

The country's manufacturing activity contracted at the fastest pace in 30 months in February, a business survey showed on February 21, 2023. The PMI of the Jibun Bank flash Japan manufacturing purchasing managers fell to 47.4 in February, from a final 48.9 in the previous month.

The index was below the 50 level that separates contraction from expansion for a fourth consecutive month and marked the largest decline since August 2020's 47.2.

Factory output and new orders decreased for an eighth consecutive month and at a faster rate than January, according to the sub-index data.

Service sector activity grew for the sixth month with further relaxation of domestic COVID 19 countermeasures. The government said last month it would downgrade the public health classification of the coronaviruses in May.

In February, the PMI of the Jibun Bank rose to an eight month high of 53.6 seasonally adjusted from the previous month's 52.3 final.

Andrew Harker, the economics director at S&P Global Market Intelligence, said service providers posted a surge in activity and new business as the latest wave of the COVID-19 epidemic faded, giving a boost to demand.

Service firms' input costs went up at the fastest pace in eight months, while the inflation for prices they charged customers rose to a two-month high, indicating thinner profits.

The companies will be hoping that price pressures will be less in the coming months to provide some support to customer demand, said Harker.

Service operators' confidence improved despite the challenges of the cost environment, with the business sentiment sub-index rising from a 10 month low.

The composite PMI of the Au Jibun Bank Flash Japan was 50.7 in February, in line with last month's final figure, as the gloomy manufacturing index was offset by a rosy service PMI.