Japan manufacturing activity slows in February

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Japan manufacturing activity slows in February

Japan's manufacturing activity increased at the slowerest pace in five months in February, underscoring the prolonged impact that global supply chain disruptions are having on the world's third-largest economy.

Activity in the services sector fell at the fastest rate since May 2020, as demand weakened after the country saw coronaviruses spike to a new record due to the Omicron variant.

The PMI of the Jibun Bank Flash Japan Manufacturing Manufacturing Purchasing Managers fell to a seasonally adjusted 52.9 from a final 55.4 in the previous month. A reading below 50 indicates contraction from the previous month, above 50 expansion.

For the first time in five months, the rate of contraction was considerably softer than that seen in the dominant services sector, said Usamah Bhatti, economist at IHS Markit.

The survey showed a longer delivery times that exacerbated material shortages, leading input prices to rise at the fastest rate since August 2008.

Firms reported rising input prices and material shortages, notably in fuel and metals, had dampened private sector activity, according to Bhatti.

Since the beginning of the survey in October 2001, the manufacturing of raw materials has gone up at the sharpest pace since.

The survey showed that both manufacturers and service-sector firms were less optimistic about business conditions in the 12 months ahead.

The PMI Index of the Jibun Bank Flash Services dropped to a seasonally adjusted 42.7, down from the previous month's final of 47.6.

The au Jibun Bank Flash Japan Composite PMI, calculated by using both manufacturing and services, dropped to 44.6 from January's final of 49.9, marking the lowest level since June 2020's 40.8.