Japan PMI May 2021


Japan: Composite PMI returns to contractionary territory in May

May 21, 2021

The Jibun Bank Composite Purchasing Managers’ Index (PMI)—which combines the PMIs of the services and manufacturing sectors—fell to 48.1 in May according to a flash reading, dropping from April’s final figure of 51.0. As such, the reading moved below the 50-threshold, and therefore indicated a deterioration in operating conditions from the prior month. April’s composite figure was likely weighed on by the announcement of a third state of emergency covering major cities such as Tokyo, Osaka and Kyoto.

The services PMI fell to 45.7 in May from 49.5 in April, with new business contracting for the 16th month in a row. On the manufacturing side, the PMI dropped to 52.5 in May from 53.6 in the month prior. The reading reflected easing output and new order growth, but nonetheless marked the fourth consecutive month of improving conditions.

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

“Disruption to short-term activity is likely to remain until the latest wave of COVID-19 infections passes and restrictions enacted under state of emergency laws are lifted. However, Japanese private sector companies were optimistic that business conditions would improve in the year ahead, albeit to a lesser extent than that seen in April. Positive sentiment stemmed from the expectation that the currently sluggish vaccine rollout would gather pace and aid in the submission of the pandemic, in turn triggering a recovery in demand in both domestic and external markets.”

FocusEconomics Consensus Forecast panelists project private non-residential investment to rise 2.3% in 2021, which is up 1.4 percentage points over last month’s projection, and grow 4.4% in 2022.

Author:, Economist

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Japan PMI Chart

Japan PMI May 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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