Japan PMI July 2021


Japan: Composite PMI falls further into contractionary territory in July

July 23, 2021

The Jibun Bank Composite Purchasing Managers’ Index (PMI)—which combines the PMIs of the services and manufacturing sectors—fell to 47.7 in July according to a flash reading, dropping from June’s final figure of 48.9. As such, the reading moved further below the 50-threshold, and therefore indicated a third consecutive deterioration in operating conditions from the prior month.

Concurrently, the services PMI fell to 46.4 in July from 48.0 in June, as demand dropped at a sharper rate. On the manufacturing side, the PMI inched down to 52.2 in July from 52.4 in the month prior. The reading reflected easing new order growth and a decline in output, but nonetheless marked the sixth consecutive month of improving conditions.

Commenting on the outlook, Usamah Bhatti, economist at IHS Markit, reflected:

“Short-term disruption to activity is likely to continue until the latest wave of Covid-19 infections passes and restrictions enacted under state of emergency laws are lifted. Japanese private sector firms were optimistic that business conditions would improve in the year ahead, though the degree of optimism was the softest since January. Positive sentiment stemmed from the expectation that the virus would be suppressed as the vaccination programme continues”

FocusEconomics Consensus Forecast panelists project private non-residential investment to rise 1.2% in 2021, which is down 0.4 percentage points over last month’s projection, and grow 4.6% in 2022.

Author:, Economist

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Japan PMI Chart

Japan PMI July 2021

Note: Jibun Bank Composite, Manufacturing and Services Purchasing Managers’ Index. Readings above 50 indicate an overall increase compared to the previous month, and below 50 an overall decrease.
Source: IHS Markit and Jibun Bank.

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