Japan factory activity shrinks to 19-month low in August

Japan factory activity shrinks to 19-month low in August

Japan's factory activity slowed to a 19 month low in August, due to the decline of output and new order in August due to rising raw material and energy costs and weakening global demand.

In August, the PMI of the Jibun Bank Flash Japan Manufacturing Purchasing Managers' Index fell to 51.0 from a 52.1 final in July, marking the slowest expansion since January last year. The 50 mark separates contraction from expansion.

The headline figure was down for the second consecutive month in a row of declines in output and overall new orders. The fastest increase in orders in nearly two years was witnessed in the new orders.

The survey showed optimism about conditions for the year ahead underpinned the slightly positive headline figure. Producers were less optimistic about the situation ahead compared to the previous month.

August data showed the second-weakest reading in the composite index this year, though the rate of deterioration was mild, said Usamah Bhatti, economist at S&P Global Market Intelligence, which compiles the survey.

The amount of new business received by private sector firms, which had decreased for the first time in six months, was a concern and pointed out further weaknesses to come. The PMI Index of the Jibun Bank Flash Services fell to 49.2 in August from July's final of 50.3, contracting for the first time since March.

The July 50.2 final saw a decline to 48.9 from the Jibun Bank Flash Japan Composite PMI, which was calculated by using both manufacturing and services.