Japan: Composite PMI falls deeper into contractionary territory in February
The Jibun Bank Composite Purchasing Managers’ Index (PMI)—which combines the PMIs of the services and manufacturing sectors—slipped lower to 44.6 in February according to a flash reading, down from January’s final figure of 49.9. As such, the reading moved further below the 50-threshold, indicating a deterioration in operating conditions for the second consecutive month.
Concurrently, the services PMI plunged to 42.7 in February from 47.6 in January, on the back of a fall in demand amid the rapid spread of the Omicron variant. On the manufacturing side, the PMI fell to a five-month low of 52.9 in February from 55.4 in the prior month. The reading reflected declining output and lower growth in new orders, but still marked the thirteenth consecutive month of improving conditions.
Commenting on the reading, Usamah Bhatti, economist at IHS Markit, reflected:
“Activity at Japanese private sector businesses contracted sharply during February as the Omicron variant of Covid-19 led to record case numbers and renewed restrictions in Japan. The decline was the second in successive months though was the sharpest recorded for 20 months and came amid the steepest downturn in the services sector since the first wave of the pandemic in May 2020.”