Japan's Factory Activity Dips for Eighth Month, Services Expand
TOKYO - Japan's factory sector activity declined for an eighth consecutive month in February, albeit at a slower pace, according to a private survey released Friday. This suggests that struggling factories may be gradually stabilizing.
Despite business spending driving GDP growth last quarter, manufacturing has remained sluggish, even ahead of impending U.S. tariffs on key Japanese exports.
The au Jibun Bank Japan flash manufacturing purchasing managers' index (PMI) rose to 48.9 from 48.7 in January, its lowest level in 10 months. While still below the contraction threshold of 50.0, this slight improvement hints at a modest recovery.
The uptick was attributed to a milder decline in both output and new orders, crucial components of the manufacturing PMI. However, "confidence regarding business activity growth over the next 12 months softened in February," said Usamah Bhatti, an economist at survey compiler S&P Global Market Intelligence.
Future output expectations among manufacturers were the lowest since June 2020. "Companies cited labor shortages, inflation, and economic uncertainty as factors dampening sentiment," Bhatti added.
Sub-indexes indicated a decrease in employment levels for the first time since November, while input prices continued to rise faster than the previous month.
In contrast to manufacturing, the au Jibun Bank flash services PMI recorded further improvement to 53.1 in February, driven by sustained growth in new businesses supported by robust demand.
The au Jibun Bank flash Japan composite PMI, incorporating both manufacturing and service sector activities, rose to 51.6 from 51.1 in January.