Japan's factory, service sectors pummelled

TOKYO • Japan's services sector shrank at a record pace in April, while factories also fell quiet across the country due to the fallout from the coronavirus pandemic as an economic contraction deepens.

The au Jibun Bank Flash Japan Manufacturing Purchasing Managers' Index (PMI), released yesterday, slumped to a seasonally adjusted 43.7 from a final 44.8 last month, its lowest since April 2009.

The au Jibun Bank Flash Japan Services PMI index plunged to 22.8 on a seasonally adjusted basis, marking the lowest since the start of the services sector survey in September 2007. Services sector activity compared with a final reading of 33.8 in the previous month.

Large parts of the economy have come to a standstill after the government announced a month-long state of emergency to fight the virus pandemic.

Economist Joe Hayes at IHS Markit, which compiles the survey, said: "Given Japan's lagged response relative to other parts of the world, one would expect this to be extended, meaning the harsh economic effects are likely to drag out further."

The economy looks set to contract at an annual rate of more than 10 per cent in the second quarter, he added, likely marking the third straight quarter of contraction.

The PMI manufacturing survey showed the downturn in factory output gained speed from the previous month, with the sub-index hitting its lowest in nine years.

IHS Markit said companies overwhelmingly attributed this to the coronavirus pandemic, which triggered shutdowns, delayed deliveries and led to a plunge in sales.

The au Jibun Bank Flash Japan Composite PMI, which includes both manufacturing and services, fell to 27.8 in April, also the lowest on record and down from the previous month's final of 36.2.

REUTERS