Japan s manufacturing activity went up in March from the previous month as a reduction in COVID 19 cases helped lift orders and production. The outlook was clouded by the surging input prices and Russia's war in Ukraine.
Activity in the services sector, which has been battered by the pandemic, contracted for the third month in a row, but the pace of decline slowed.
In March, the Jibun Bank Flash Japan Manufacturing Purchasing Managers Index PMI increased to 53.2 from a final 52.7 in the previous month. A reading below 50 indicates contraction from the previous month, above 50 expansion.
The output rebounded from a contraction in the previous month, while activity in new orders posted an expansion, albeit at its slowest rate in six months.
The conflict in Ukraine and the soaring oil and raw material prices hurt momentum for the world's third largest economy, even as it saw new coronaviruses infections caused by the omicron variant slow.
The survey was compiled by firms across the Japanese private sector, as well as an increase in price pressures, said Usamah Bhatti, economist at IHS Markit.
Input prices rose at the fastest pace since August 2008 with businesses attributing the rise to surging raw material prices, including energy, oil and semiconductors, due to deteriorating supplier performance. The PMI Index of the Jibun Bank Flash Services rose to a seasonally adjusted 48.7 from February's final 44.2 to mark the third straight month of contraction.
The au Jibun Bank Flash Japan Composite PMI, which is calculated by using both manufacturing and services, also shrank for a third consecutive month, rising to 49.3 from last month's final of 45.8.
In March, Japanese firms reported softer optimism for the 12 months ahead, according to Bhatti.
The positive sentiment was the lowest for 14 months, due to concerns about the economic impact of the Russia-Ukraine conflict.