Japanese Business Activity Shrinks in October

Investing.com — Japanese business activity shrank in October, according to preliminary purchasing managers index data released on Thursday, revealing contraction in both the manufacturing and services sectors throughout the month.

The au Jibun Bank Flash Manufacturing PMI fell to 49.0 in October from 49.7 in September, missing expectations for a reading of 49.9. A figure below 50 indicates contraction, marking the third consecutive month of decline in the sector.

Japan’s manufacturing sector has been facing increased challenges due to production disruptions at the country’s largest automakers amid a growing safety scandal. Additionally, weak local and international demand led to a decrease in order growth and employment during the month.

These issues impacted the service sector, which had previously helped maintain overall Japanese business activity in expansion. The au Jibun Bank Flash Services PMI dropped to 49.3 in October from 53.1 the previous month, signaling contraction for the first time since June.

Consequently, the composite PMI for October fell to 49.4 from 52.0 in the prior month.

Economists at S&P Global noted that the decline was attributed to weaker economic conditions in Japan, with a recent increase in private spending only providing a limited boost to the economy. Thursday’s data also indicated that Japanese companies are becoming increasingly less confident about the economic outlook.