Japan: Composite PMI declines slightly in September
The Jibun Bank flash composite Purchasing Managers’ Index (PMI) fell from August’s 51.9 to 51.5 in September. Despite the decline, the index remains above the 50-point threshold that separates expansion from contraction in the private sector.
September’s decline in the composite index mostly reflected that manufacturing activity fell at the fastest pace in seven months on the back of negative spillovers from the China-U.S. trade war, protests in Hong Kong, uncertainty ahead of Brexit and the diplomatic rift between the country and Korea. The manufacturing PMI revealed that all-important output and new orders contracted for the ninth month in a row in September, while the backlog of work declined to a nearly seven-year low.
In turn, despite declining slightly, activity in the services sector remained firmly entrenched in positive territory in September. Joe Hayes, an economist at IHS Markit, which compiles the survey, noted that:
“The resilience of Japan’s service sector to the struggles of the country’s manufacturers continued to shine through during September. As a result, it’s looking like Japan will boast what will be a robust rate of growth in the current climate for the third quarter.[…] Although, whether the third quarter performance can offset what is likely to be a challenging fourth quarter as consumer and businesses adjust to the sales tax hike is not guaranteed.”