Japan’s factory activity dipped in September, with softer production, though the service sector’s growth bolstered overall business momentum, revealed a survey on Tuesday. The au Jibun Bank flash Japan manufacturing purchasing managers’ index dropped slightly to 49.6 in September from 49.8 in August, marking the third consecutive month below the 50.0 threshold, which separates growth from contraction. The subindex for output slipped marginally compared to August, while new orders contracted at a slower rate. Inflation for both input and output prices eased.
Earlier data indicated that Japan’s annual wholesale inflation slowed in August due to the yen’s rebound, impacting import costs. Manufacturers’ confidence in future prospects was muted in September, with the output prospects index hitting its lowest since December 2022. The Reuters Tankan survey, which aligns closely with the Bank of Japan’s quarterly business survey, showed that the sentiment among major Japanese manufacturers fell to a seven-month low in September, influenced by weak Chinese demand.
The au Jibun Bank flash services PMI rose to 53.9 in September, the highest in five months, up from 53.7 in August. Input prices grew at the slowest rate since March, yet prices charged for services increased as firms transferred higher costs to customers. Usamah Bhatti, an economist at S&P Global Market Intelligence, noted that business activity expansion in September was predominantly services-led. Both manufacturing and services companies experienced softer cost pressures, but average operating expenses remained historically high.
🌐 With Japan’s S&P Flash PMI data released, this is how all Flash PMIs settled in September.
Notably, all countries reporting data saw a decline in growth or a turn to contraction… except for the USA.
Deterioration in the euro area economy was especially strong as a result… pic.twitter.com/plXPEHEI5C
— MTS Insights (@MTSInsights) September 24, 2024
The au Jibun Bank flash Japan composite PMI, which merges manufacturing and service sector activities, stood at 52.5 in September, indicating the third consecutive month of expansion. On Friday, the Bank of Japan maintained steady interest rates, as expected, following the cessation of negative interest rates in March and the increase of short-term rates to 0.25% in July.
Frequently Asked Questions
Here are some common questions asked about this news
Why did Japan’s factory activity ease in September?
Japan’s factory activity eased due to softer production.
What is the au Jibun Bank flash Japan manufacturing PMI for September?
The PMI fell to 49.6 in September from 49.8 in August.
How did Japan’s service sector perform in September?
The service sector expanded with the PMI rising to 53.9, the highest in five months.
What factors influenced Japan’s wholesale inflation in August?
The yen’s rebound weighed on import costs, slowing wholesale inflation.
What is the outlook for Japanese manufacturers’ confidence?
Manufacturers’ confidence was subdued with output prospects at the lowest since December 2022.
