Japan factory activity declines in August; services see growth
Factory activity falls in August, but service sector shows growth
Japan’s factory activity saw a decline in August due to weak demand, though the decline’s pace slowed. Meanwhile, the service sector experienced growth, indicating positive conditions in certain industries, according to a business survey released on Thursday. Despite this, rising price pressures and labour constraints remained concerns, especially for the service sector.
The au Jibun Bank flash Japan manufacturing purchasing managers’ index increased to 49.5 in August from 49.1 in July but stayed below the 50.0 threshold that separates growth from contraction for the second consecutive month. Jingyi Pan, Economics Associate Director at S&P Global Market Intelligence, which compiled the survey, noted the contrasting demand trends, with a solid rise in new business for services against subdued demand in the goods-producing sector.
The subindex for new orders contracted at a slower rate in August, while output expanded as an increased workforce capacity helped clear a backlog of orders in manufacturing. Output price inflation eased as manufacturers hesitated to raise selling prices, though average input costs rose at the fastest pace since April 2023, indicating persistent pressure.
Japan's factory activity shrank in August amid subdued demand although the pace of decline slowed, while the service sector expanded, showing upbeat conditions in some industries, a business survey showed on Thursday (Aug 22).—Channel News Asiahttps://t.co/QxRUf44qtj
— Asia Customs & Trade (@Asia_Customs) August 22, 2024
The au Jibun Bank flash services PMI climbed to 54.0 in August from 53.7 in July. Strong new business inflows, including export business, contributed to the rise in activity. The au Jibun Bank flash Japan composite PMI, which combines both manufacturing and service sector activities, increased to 53.0 in August, the highest level since May 2023, from 52.5 in July.
This survey followed a Reuters Tankan report last week, which indicated that Japanese manufacturers became less confident about business conditions in August, while the service sector’s mood dipped due to lacklustre demand from China. Japan’s economy grew in the second quarter, recovering from an early-year slump due to increases in consumption and capital spending.
What Other Media Are Saying
- Reuters reports that Japan’s factory activity declines, as shown by a slow PMI, reflecting a decline in manufacturing output.(read more)
- S&P Global Market Intelligence reports that Japan’s private sector economic growth quickened in August, driven by services growth, while manufacturing output remained in decline.(read more)
- Business Times reports that Japan’s service activity contracted for the first time in nearly two years in June, with a private sector survey showing a decline in domestic demand.(read more)
Frequently Asked Questions
Here are some common questions asked about this news
How did Japan’s factory activity perform in August?
Japan’s factory activity shrank in August, but the pace of decline slowed.
What was the manufacturing PMI for Japan in August?
The au Jibun Bank flash Japan manufacturing PMI was 49.5 in August.
Did Japan’s service sector grow in August?
Yes, the service sector expanded, with the PMI rising to 54.0 in August.
What are the main concerns for Japanese firms according to the survey?
Rising price pressures and labour constraints are major concerns, especially in the service sector.
How did Japan’s composite PMI perform in August?
The composite PMI, combining manufacturing and services, grew to 53.0 in August.
