Japan PMI manufacturing dropped to 52.5 in May, down from 53.6, below expectation of 53.8. PMI Services dropped notably to 45.7, down from 49.5. PMI Composite dropped to 48.1, down from 51.0, back in contraction again.
Usamah Bhatti, Economist at IHS Markit, said: “Flash PMI data indicated that activity at Japanese private sector businesses saw a renewed reduction in May. Output fell at the quickest pace for four months, while the contraction in new business inflows was the fastest since February. Survey members widely attributed the deterioration in business conditions to a resurgence in COVID-19 cases and the reimposition of state of emergency measures.
“Positively, private sector firms were not discouraged from further increasing capacity, as employment levels rose for the fourth consecutive month. This was despite another sharp rise in input costs across the Japanese private sector.
“Disruption to short-term activity is likely to remain until the latest wave of COVID-19 infections passes and restrictions enacted under state of emergency laws are lifted. However, Japanese private sector companies were optimistic that business conditions would improve in the year ahead, albeit to a lesser extent than that seen in April. Positive sentiment stemmed from the expectation that the currently sluggish vaccine rollout would gather pace and aid in the submission of the pandemic, in turn triggering a recovery in demand in both domestic and external markets.”
