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Japan PMI January 2022

Japan: Composite PMI falls into contractionary territory in January amid Omicron surge

The Jibun Bank Composite Purchasing Managers’ Index (PMI)—which combines the PMIs of the services and manufacturing sectors—tumbled to 48.8 in January according to a flash reading, down from December’s final figure of 52.5. As such, the reading dropped below the 50-threshold, indicating a deterioration in operating conditions after three consecutive months of improvement.

Concurrently, the services PMI dropped to 46.6 in January from 52.1 in December, on the back of a fall in demand and declining staffing levels due to the reimposition of restrictions amid the spread of the Omicron variant. On the manufacturing side, the PMI increased slightly to 54.6 in January from 54.3 in the prior month. The reading reflected stronger increases in new orders and output, and marked the twelfth consecutive month of improving conditions.

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

“Private sector firms reported that the surge in Covid-19 cases from the more transmissible Omicron variant had hindered client confidence, most notably in customer-facing industries across the service sector as restrictions were re-introduced across various prefectures including the capital Tokyo.”

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