Tokyo, Japan - October 24, 2024 - Japanese business activity experienced a contraction in October, as indicated by preliminary purchasing managers index (PMI) data. Both the manufacturing and services sectors reported declines, marking a challenging month for the economy.
The au Jibun Bank flash manufacturing PMI decreased to 49.0 in October, down from 49.7 in September, falling short of expectations for a reading of 49.9. A PMI reading below 50 signifies contraction, indicating that the manufacturing sector has now contracted for three consecutive months.
The contraction in manufacturing is attributed to production disruptions faced by major automakers amid a growing safety scandal. Additionally, weak local and international demand has contributed to reduced order growth and employment within the sector.
Service sector activity also declined, with the au Jibun Bank flash services PMI dropping to 49.3 in October from 53.1 in the previous month, marking its first contraction since June. This decline in services contributed to an overall composite PMI of 49.4, down from 52.0 in September.
Economists at S&P Global noted that the decrease in business activity reflects deteriorating economic conditions in Japan, despite a recent uptick in private spending providing only limited support for the economy.