TOKYO (Reuters) – Growth in factory activity in Japan slowed in June as tough COVID-19 restrictions in China weighed on manufacturing demand, even as service sector sentiment hit a low. peak of almost nine years due to the disappearance of the pandemic.
China’s COVID-19 lockdowns have disrupted supply chains, heavily affecting trade-dependent economies like Japan.
Japan’s Jibun Bank Manufacturing Purchasing Managers’ Index (PMI) slipped to a seasonally adjusted 52.7 in June from 53.3 in May, marking the slowest expansion since February, when it was also down 52.7.
In April and May, the manufacturing PMI also rose at a slower pace than the previous month.
Overall, new orders fell for the first time in nine months due to increasing pressure on already disrupted supply chains, while production increased at its slowest pace in three months, according to the ‘investigation.
New business in the services sector increased for a second consecutive month as the recovery in tourism helped to strengthen general conditions in the private sector.
“Activity in Japan’s private sector companies has increased in a solid way,” said Usamah Bhatti, economist at S&P Global Market Intelligence, which compiles the survey.
General private-sector sentiment saw the strongest rise since November amid the largest expansion in services since October 2013, he said.
The Flash Services PMI at Jibun Bank improved to 54.2 seasonally adjusted in June from the previous month’s close of 52.6. The 50 mark separates contraction from expansion.
The Flash Japan Composite PMI at Jibun Bank, which is calculated using both manufacturing and services, rose to 53.2 from a final of 52.3 in May.
But the survey also showed that Japanese companies continued to face widespread pressure from high commodity prices.
“Prices charged for Japanese goods and services increased at an unprecedented rate for the second consecutive month, with rising material and labor costs being partially passed on to customers,” Bhatti added.
