TOKYO • Japan's factory activity expanded at the fastest pace in more than three years this month, a private business survey showed yesterday, even as expected coronavirus emergency measures clouded the outlook for the world's third-largest economy.

But activity in the service sector contracted for a 15th month, the survey showed. Services companies are likely to take the biggest hit from a surge in Covid-19 cases and new emergency curbs expected to be rolled out in key prefectures from tomorrow.

The au Jibun Bank Flash Japan Manufacturing Purchasing Managers' Index (PMI) rose to a seasonally adjusted 53.3 in April from a final 52.7 in March.

The reading, which marked the highest level since April 2018, meant manufacturing activity came in above the 50.0 threshold that separates contraction from expansion for three straight months.

"The boost in private sector activity was led by the manufacturing sector, as the larger services sector saw business activity deteriorate," said economist Usamah Bhatti at IHS Markit, which compiles the survey. "There is concern the impact of the pandemic will be prolonged further."

Despite the activity improvements, manufacturers saw fallout from the pandemic which resulted in job shedding and a drop in output prices while input prices remained elevated, causing the widest gap between the two since December 2014.

The au Jibun Bank Flash Services PMI index was unchanged from the previous month's final reading, at 48.3, while the Composite PMI, which is calculated using both manufacturing and services, stood at 50.2 in March, up for the first time since January last year.

REUTERS