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Japan PMI August 2023

Japan: Composite PMI improves in August

The au Jibun Bank Composite Purchasing Managers’ Index (PMI) rose to 52.6 in August from July’s 52.2. As a result, the index moved further above the 50.0 no-change threshold, signaling a faster improvement in private sector operating conditions compared to the previous month.

Business activity was again driven by the services PMI, which increased to 54.3 in August (July: 53.8). Meanwhile, the manufacturing PMI came in at 49.7 in August, up from July’s 49.6.

In the services sector, output rose at a quicker pace, in part thanks to a sharper rise in new orders. In addition, employment rebounded. The sector likely continued to be boosted by international tourism and the loosening of Covid-19 curbs in April. In the manufacturing sector, output and new orders continued to decline, likely due to weak economic growth in Japan’s main trading partners. In addition, employment stagnated. Looking at prices, input inflation increased in both sectors, with rising oil prices cited as a reason; Japan is particularly susceptible to rising oil prices due to the fact that it is a net importer of the commodity and because the price of LNG imports is often linked to the spot price of crude. Meanwhile, output inflation rose in the services sector and fell in the manufacturing sector. Finally, business sentiment fell in both sectors.

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