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Japan’s Manufacturing, Services Sectors Still in Contraction

Posted Wednesday, September 23, 2020 by
Arslan Butt • 1 min read

The manufacturing sector in Japan continued to remain under pressure for the 17th consecutive month, with output contracting at a faster pace than over the past four months. The au Jibun Bank Flash Japan Manufacturing PMI reading for September touched 47.3 from a final reading of 47.2 in August, remaining under the 50-threshold indicating contraction.

New orders received and suppliers’ delivery times declined at the slowest pace seen since January, offering some hope. In addition, the outlook among Japanese manufacturers has also soared to the highest level in two years during the latest edition of the survey.

Bernard Aw, principal economist at IHS Markit, notes, “New order inflows continued to fall in September, reflecting subdued demand. That said, the picture of the economy remained much improved when compared to the height of the pandemic during the second quarter.”

Meanwhile, Japan’s service sector also experienced an improvement in activity, contracting at the slowest rate in seven months during September. The au Jibun Bank Flash Services PMI reading increased from 45 in August to 45.6 in September, sending the composite PMI from 45.2 in August to 45.5 for the current month.

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