Japan’s Private Sector Output Falls Back To Contraction Amid Reimposition Of State Of Emergency

Japan’s private sector reported a contraction in May as a state of emergency was reimposed, according to IHS Markit.

• The au Jibun Bank Flash Japan Composite PMI fell to 48.1 in May to fall below the 50 threshold that separates contraction and expansion.
• The PMI was recorded at 51.0 in April, which was preceded by 14 consecutive months of recession.
• The state of emergency across various prefectures was extended until the end of May, after first being reimposed in April.
• Output for the month recorded the sharpest decline since January, as services was affected by the renewed movement restrictions.
• New orders for the month posted the biggest drop since February, but international new business recorded inflows for the fourth consecutive month.
• Japanese firms are optimistic that output will improve in the next 12 months across both the manufacturing and service sectors.
• Optimism is supported by the improvement in conditions overseas, particularly among Japan’s top trading partners.