Japan: Composite PMI records worst reading since August 2020 in August
August 23, 2021
The IHS Markit Composite Purchasing Managers’ Index (PMI) came in at 45.9 in August, down from July's 48.8. August's result marked the weakest reading since August 2020. As such, the index fell further below the 50-threshold, signaling a sharper deterioration in business conditions compared to the previous month.
The fall came on the back of a deterioration in the Manufacturing and Services PMIs. Momentum in output, new orders and exports eased in both sectors, likely a result of the imposition of the state of emergency. That said, employment dynamics improved.
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.”
Author: Stephen Vogado, Economist