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Friday, May 20, 2022

January manufacturing growth in Japan reaches four-year high, but service contracts – Flash PMI

TOKYO — Manufacturing activity in Japan rose at its fastest pace in four years in January as production growth accelerated, though pressure from persistent woodchip shortages, rising commodity prices and the coronavirus pandemic clouded the outlook.

However, activity in the private sector as a whole eased for the first time in four months as a surge in Omicron coronavirus cases hurt customer service businesses.

Japan’s Jibun Bank Flash Manufacturing Purchasing Managers’ Index (PMI) rose to a seasonally adjusted 54.6 from 54.3 the previous month, the fastest pace of growth since January 2018.

Producers reported the fastest rise in product prices since July 2008, indicating that firms are increasingly moving into higher production costs that continue to rise rapidly.

Growth in output and new orders accelerated after momentum eased slightly in the previous month.

But worries about the Omicron option amid a record surge in new coronavirus infections and the re-imposition of COVID-19 restrictions in parts of the country have severely disrupted service-sector activity.

The seasonally adjusted PMI au Jibun Ban Flash Services fell to 46.6 from a final 52.1 in December, declining at the fastest rate in five months.

The survey showed that the pace of job losses in the sector accelerated for the second month in a row and reached its highest level since May 2020.

“Private sector firms have reported that the surge in COVID-19 cases due to the more contagious Omicron variant has eroded customer confidence,” said Osama Bhatti, an economist at IHS Markit who is compiling the survey.

“There were also reports of disruptions in the labor market, where employment fell for the first time in a year.”

The Jibun Bank Flash Japan Composite PMI, which is calculated using both manufacturing and services, fell to 48.8 from last month’s final reading of 52.5.

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