Japan’s Factory PMI Expands as Virus Outbreak Weighs on Services

Japan’s manufacturing activity expanded for a third month in April while a contraction in the service sector continued amid a fresh wave of coronavirus infections.

The au Jibun Bank Japan’s purchasing managers index for manufacturing sector activity rose 0.6 point to 53.3, while its measure of service sector activity was unchanged at 48.3. Numbers above 50 indicate an expansion and those below 50 signal a contraction.

Japan’s Factory PMI Expands as Virus Outbreak Weighs on Services

Factory activity has been supported by a recovery in exports to the U.S. and China, Japan’s most important trade partners. Service activity took a hit from ongoing restrictions on businesses as Japan struggles to contain the latest wave of virus infections, forcing the government to recommend reinstating a state of emergency in key economic hubs such as Tokyo and Osaka.

“The boost in private sector activity was led by the manufacturing sector, as the larger services sector saw business activity deteriorate,” said Usamah Bhatti, economist at IHS Markit, which compiles the survey. “There is concern the impact of the pandemic will be prolonged further.”

If tighter restrictions are imposed, the emergency will likely limit the economic rebound for the current quarter that is expected following a contraction in the first quarter. Prime Minister Yoshihide Suga has maintained the government’s stance that the Tokyo Olympics will start in July, as planned, despite the emergency.

©2021 Bloomberg L.P.

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