TOKYO (Reuters) – Japan’s factory activity contracted for the fourth straight month in October on subdued demand and weak orders, a private-sector survey showed on Thursday.
The au Jibun Bank flash Japan manufacturing purchasing managers’ index (PMI) declined to 49.0 in October from 49.7 in September.
The index stayed below the 50.0 threshold separating growth from contraction for a fourth straight month.
“New orders decreased across manufacturing and services,” said Usamah Bhatti, economist at S&P Global Market Intelligence, which compiled the survey.
“Poor demand conditions were not limited to just the domestic economy as new orders from abroad fell at the quickest pace since February 2023.”
The subindex for new orders for the manufacturing sector shrank further in October, having stayed below the 50.0 threshold since June last year. Output contracted for a second straight month in October.
Japan’s exports fell for the first time in 10 months in September on soft demand in China and slowing U.S. growth, government data showed last week.
The au Jibun Bank flash services PMI slipped to 49.3 in October, the first contraction in four months and the lowest level since February 2022. It stood at 53.1 in September.
Firms in the service sector said economic weakness in Japan and overseas prompted clients to hold back on new orders, the survey showed.
Overall business confidence for the next 12 months softened in October to the weakest level since August 2020, due to a soft economy and persistently higher costs, a composite index of both the manufacturing and services sectors showed.
The au Jibun Bank flash Japan composite PMI, which combines both manufacturing and service sector activity, fell to 49.4 in October, the first contraction in four months.
A survey by Reuters earlier this month showed Japanese manufacturers’ business mood improved in October from the previous month although they remained concerned about China’s economy.
The International Monetary Fund (IMF) projected Japan’s economic growth to slow to 0.3% this year from 1.7% in 2023.
(Reporting by Kaori Kaneko; Editing by Sam Holmes)
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