Japan's July factory activity grows at slowest pace in 5 months

The au Jibun Bank Flash Japan Manufacturing Purchasing Managers' Index slipped to a seasonally adjusted 52.2 in July. PHOTO: REUTERS

TOKYO (REUTERS) - Japan's factory activity expanded at the slowest pace in five months in July, a private sector survey showed on Monday (July 26), underscoring the world's third-largest economy's struggle to stage a convincing recovery from the coronavirus pandemic.

The au Jibun Bank Flash Japan Manufacturing Purchasing Managers' Index (PMI) slipped to a seasonally adjusted 52.2 in July from a final 52.4 in the previous month, in a sign of a softer improvement in operating conditions.

Among key economic elements, output and new orders growth eased to six-month lows amid rising Covid-19 infections and delays in getting raw materials, said Mr Usamah Bhatti, economist at IHS Markit, which compiles the survey.

The survey also showed the services sector continued to face severe conditions, with activity contracting at the fastest pace in five months and marking the 18th straight month of decline.

Bhatti said that meant overall private-sector activity fell at a faster rate in July than in the previous month.

"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," Mr Bhatti said.

"Employment levels in the Japanese private sector continued to expand, however the rate of job creation eased," he added. "At the same time, input costs across the private sector rose at the fastest pace since September 2008."

The au Jibun Bank Flash Services PMI index dropped to a seasonally adjusted 46.4 from the previous month's final of 48.0.

The au Jibun Bank Flash Japan Composite PMI, which is calculated using both manufacturing and services, fell to 47.7 from last month's final of 48.9.

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