Japan’s factory activity is slowly recovering and is close to expansion. The au Jibun Bank flash Japan manufacturing Purchasing Managers’ Index (PMI) for April was 49.9, up from 48.2 in March and the closest to the break-even point of 50 (separating contraction from growth) since June. Output and new orders, two important components of the PMI, contracted at their slowest pace in six and ten months, respectively. Manufacturers’ confidence and employment growth also increased. However, input cost inflation led to the fastest increase in average output prices in nine months.
Meanwhile, the service sector continued to expand, with the au Jibun Bank flash services PMI rising to 54.6 in April, the highest since May 2022. New business expansion was the fastest in ten months, driving overall growth. More service providers also passed on higher costs to customers, resulting in the highest selling prices in a decade.
The au Jibun Bank flash Japan composite PMI, which combines manufacturing and service sector activity, reached 52.6 in April, the highest since August 2022.
