Sanko Manufacturing Co. employees are seen at the assembly line of the company's ventilators at a factory in Saitama, north of Tokyo, Japan on May 8, 2020. TOKYO, January 24, Reuters -- Japan's factory activity grew at the fastest pace in four years in January as output growth picked up, despite pressure from a persistent chip shortage, rising input prices and the coronaviruses epidemic clouded the outlook.
Activity in the private sector as a whole fell for the first time in four months as a surge in Omicron variant coronaviruses hurt customer-facing businesses in the services industry.
The Jibun Bank Flash Japan Manufacturing Purchasing Managers' Index PMI increased to a seasonally adjusted 54.6 from the previous month's final of 54.3 to mark the fastest expansion since January 2018.
In July 2008, the fastest increase in output prices was reported by manufacturers, suggesting that firms were passing on higher input costs, which continued to rise rapidly.
After the momentum faded somewhat in the past month, the output and new order growth increased.
Concerns about the Omicron variant have hurt activity in the services sector, due to the rise in new coronaviruses and the reintroduction of COVID 19 curbs in parts of the country. The PMI Index of Jibun Ban Flash Services fell to a seasonally adjusted 46.6 from December's final 52.1 to contract at the fastest pace in five months.
The survey shows that the sector's job shedding has increased for the second consecutive month to reach its fastest since May 2020, and that the sector has been shedding jobs for the second consecutive month.
The rise in COVID 19 cases from the more transmissible Omicron variant has hindered client confidence, according to Usamah Bhatti, economist at IHS Markit.
Employment levels fell for the first time in a year, and there was a disruption in the labour market. The au Jibun Bank Flash Japan Composite PMI, which was calculated by using both manufacturing and services, dropped to 48.8 from last month's final of 52.5.