Japan at 11-Year Low Factory Activity

Tokyo, Japan – World’s third-largest economy and export-reliant Japan is expected to suffer its worst post-war slump this quarter. Affected by the prolonged impact of the coronavirus crisis, the country's June manufacturing activity pinned at 11-year low, even as services-sector sentiment picked up, indicating decline in manufacturing activity.

The au Jibun Bank Flash Japan Manufacturing Purchasing Managers’ Index (PMI) recorded lowest since March 2009 for a second straight month, staying below the 50.0 threshold indicating contraction, to a seasonally adjusted 37.8 in June from 38.4 in May. 

Overall output and new orders declined for 18th straight month according to the PMI survey, while stocks of purchases and backlogs of work were at more than decade lows. However, for the first time since 2018, the government last week upped its economic assessment on signs of improving sentiment after a gradual lifting of state emergency in late May.  

The survey additionally highlighted a sharp increment in services-sector activity, contracted at a much slower pace in comparison to the previous month. According to Joe Hayes, Economist, IHS Markit, Flash PMI data for June reflects 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.

Image Source: Magic Wand Media

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