Continued weakness in exports even as the global economic outlook continued to worsen resulted in Japan’s manufacturing activity contracting in January – which was the third straight month of contraction, revealed a corporate survey on Tuesday.

The au Jibun Bank flash Japan manufacturing purchasing managers’ index (PMI) was 48.9 in January, which was the same as the prior month’s final reading.

The aims and hopes of Japan’s policy makers about the critical wage negotiations in the forthcoming months will be able to dissuade the pressure felt by consumers because of high inflation which is at a 41 year high, and which would aid in sustaining a fragile recovery of the economy from the pandemic were dashed by the soft factory activity.

After December’s final figure marked the fastest fall in 26 months, the index remained below the 50-line that separates contraction from expansion for the third month in a row.

Factory output and new orders fell for the seventh consecutive month, albeit at slower rates than the previous month, according to the sub-index data.

Last week’s Reuters Tankan survey revealed the first negative reading for business confidence at major Japanese corporations in two years, owing to exacerbating foreign circumstances and soaring living costs.

Service-sector activity, on the other hand, increased for a fifth month, thanks to a tourism boom and a relaxation of COVID-19 curbs.

The au Jibun Bank flash services PMI increased to a seasonally adjusted 52.4 in January, up from 51.1 in December, a three-month high.

“Similar to trends recorded over much of the past six months, a divergence between the manufacturing and services sectors has remained,” said Laura Denman, economist at S&P Global Market Intelligence, which compiles the survey.

However, service operators were less optimistic about the future, with a business sentiment sub-index falling to its lowest level in 24 months. While input prices rose faster than in the previous two months, output price inflation was the slowest in five months, putting a squeeze on profitability.

Overall, the au Jibun Bank Flash Japan composite PMI increased to 50.8 in January, up from 49.7 in December and surpassing the break-even 50 line for the first time in three months. (Adapted from USNews.com)

Categories: Economy & Finance, Entrepreneurship, Geopolitics, Regulations & Legal, Strategy, Sustainability