Economic news released on Monday showed that July saw Japan’s factory activity expand at the slowest rate in five months, as the nation struggles economically against the latest wave of Coronavirus.
The au Jibun Bank Flash Japan Manufacturing Purchasing Managers’ Index (PMI) declined to a seasonally adjusted 52.2 in July from a final 52.4 in June.
July’s figure was less than the market analysts had forecast. Expectations were for a reading of 52.3 in July.
It is important to remember that readings above 50 indicate an economy in expansion whilst readings below 50 indicate an economy in contraction.
The au Jibun Bank said in a statement accompanying the data:
“Manufacturers also noted that demand for staff eased in July, with the rate of job creation the softest since April,”.
“Nonetheless, positive sentiment remained strong overall, despite easing slightly from June,”
au Jibun Bank
Rise in Coronavirus Infections Hurting Japan
As the number of coronavirus infections continues to rise in the world’s third-largest economy, businesses in Japan have been experiencing delays in receiving raw materials. This has led to a decline in new orders and output.
The closely watched survey also showed the services sector still faces an uphill struggle when battling the pandemic. Activity contracted at the fastest rate in five months and, importantly, marked the 18th consecutive month of declines.
Usamah Bhatti, an economist at IHS Markit, the company that compiles the survey, said of the Japanese PMI:
“Short-term disruption to activity is likely to continue until the latest wave of COVID-19 infections passes and restrictions enacted under state of emergency laws are lifted,”
“Employment levels in the Japanese private sector continued to expand, however the rate of job creation eased,” he added. “At the same time, input costs across the private sector rose at the fastest pace since September 2008.”
Usamah Bhatti,
