Japan’s Manufacturing Sector Sees Greater Contraction in June
Manufacturing activity across Japan continues to suffer at the lowest level seen in 11 years into June on account of the coronavirus crisis
Manufacturing activity across Japan continues to suffer at the lowest level seen in 11 years into June on account of the coronavirus crisis, even as the services sector shows an uptick in activity. The au Jibun Bank Flash Japan Manufacturing PMI has slipped to a seasonally adjusted 37.8 during June from May’s final reading of 38.4 – the weakest reading since match 2009.
Total output and new orders continued to fall for the 18th consecutive month even as stocks of purchases and work backlogs fell to the lowest levels seen in over 10 years. Japan had recently started reopening sectors of its economy after declaring a state of emergency to contain the spread of the pandemic in April and May.
On the other hand, the au Jibun Bank Flash Japan Services PMI rose to 42.3 in June from 26.5 during May – a four-month high, even though it remains below the 50-threshold indicating contraction. The improvement in the services sector activity has driven Japan’s flash composite PMI higher as well, from 27.8 in May to 37.9 during June.
Joe Hayes, economist at IHS Markit, sounds hopeful that the PMI data is pointing to some signs of green shoots of recovery, observing, “Flash PMI data for June show us that economic activity in some parts of Japan has picked up at the back-end of the second quarter. However, a sub-50.0 reading in the composite output index indicates that the underlying picture remains bleak and many firms are yet to see a rise in output volumes.”
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