Japan’s factory activity growth slowed to the lowest level in eight months in September as input costs and Covid-19 disruptions dragged down output as well as new orders.
The au Jibun Bank’s “flash” manufacturing purchasing managers’ index (PMI) fell to 51.2, the lowest since January, from 52.7 in August. A reading above 50 suggests expansion, while under 50 points to contraction.
“Flash PMI data indicated that activity at Japanese private sector businesses was scaled back further in September,” Usamah Bhatti, economist at IHS Markit, said in a statement accompanying the data release.
Material cost and Covid being a drag
“Private sector firms reported intensifying price pressures. Input prices across the private sector rose at the fastest pace for 13 years, with businesses attributing the rise to higher raw material, freight and staff costs amid supply shortages,” said Bhatti.
The latest wave of Covid cases and government restrictions will also cause short-term disruptions, he added.
Services PMI remains in contraction
The flash services PMI remained in contraction, though improving to 47.4 from 42.9. New business inflows reduced for the twentieth month in a row as mobility restrictions extended.
The composite PMI, which combines manufacturing and services, is also in contraction, with preliminary reading at 47.7 against 45.5 in August.