Japan’s Manufacturing PMI Rises as Virus Emergency Hits Services

Japan’s factory activity expanded in February while the ongoing virus state of emergency weighed on the service sector.

The au Jibun Bank Japan’s purchasing managers index for manufacturing sector activity rose 0.8 point to 50.6, the best reading since December 2018, while its measure of service sector activity lost 0.3 point to 45.8, falling for a third month. Numbers above 50 indicate an expansion and those below 50 signal a contraction.

Japan’s Manufacturing PMI Rises as Virus Emergency Hits Services

The government has extended its state of emergency for virus-hit regions by one month until March 7. Restaurants and bars are asked to close after 8 p.m., hurting the service sector.

Meanwhile, manufacturing activity has been supported by ongoing recovery in exports, which gained for a second month in January.

“Positive sentiment stemmed from hopes that an end to the coronavirus pandemic would induce a recovery in domestic and foreign demand. Nonetheless, disruption caused by the pandemic is likely to remain in the immediate future,” said Usamah Bhatti, economist at IHS Markit, which compiles the survey.

Analysts expect the economy to contract in the quarter through March, but stronger-than-expected growth in the last three months of 2020 signals that the economy may quickly bounce back once the state of emergency ends.

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