Japan factory activity shrinks at slowest pace in six months: PMI

Japan’s manufacturing activity shrank at the slowest pace in six months in April on a softer decline in sales, while the service-sector stayed solid, a preliminary survey showed on Friday, suggesting a patchy post-Covid economic recovery.

The au Jibun Bank flash Japan manufacturing purchasing managers’ index rose to a seasonally adjusted 49.5 in April, from a final 49.2 in the previous month.

The index remained below the 50-level that separates contraction from expansion for a sixth straight month in April, pointing to the persistent struggles for factories even though the worst appeared to be over for the sector.

On the plus side, service-sector activity expanded for an eight straight month in April supported by gains in new orders and new export business, the same survey showed.

“Japan’s private sector continued to expand solidly at the start of Q2, according to latest Flash PMI data, with a resurgent service economy helping to offset a weak manufacturing sector performance,” said Annabel Fiddes, economics associate director at S&P Global Market Intelligence, which compiles the survey.

“While service providers anticipate further improvements in demand and operating conditions as the impact of Covid-19 fades, a number of manufacturers expressed concerns over the economic outlook, rising costs and component shortages,” Fiddes said.

Reuters Tankan survey showed on Wednesday big Japanese manufacturers remained pessimistic in April for a fourth straight month as jitters over Western banks added to slowing global growth. But it also showed the service sector mood improved for a second straight month to a four-month high.

The au Jibun Bank flash services PMI grew to a seasonally adjusted 54.9 this month, little changed from 55.0 in March, and marked the second highest reading since October 2013.

The au Jibun Bank Flash Japan composite PMI, which covers both the manufacturing and service sector activities, was at 52.5 in April, remaining above the 50-level for a four straight month.