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Japan Manufacturing Up, Services Slow In April: PMI Report

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Providing an early window into Japan's economy since Persian Gulf hostilities, Japan's private sector sustained an expansion in April, led by manufacturing, reported S&P Global on Thursday.

Japan's flash composite purchasing manager index (PMI) for output, a combination of the nation's factory and service sectors, logged at 52.4 in April, down from 53.0 in March, but still striking above the 50-mark that separates growth from contraction, reported S&P Global, citing its monthly survey.

Japan's flash manufacturing PMI rose to 54.9 in April, up from 51.6 in March, while the nation's services PMI registered at 51.2 in April, off from 53.4 in the previous month, added S&P Global.

"While (Japan's) services companies reported weaker growth of both activity and sales at the start of the second quarter, manufacturers signaled the steepest rise in output in over 12 years amid a solid uptick in new work," said S&P Global.

Japan's private enterprises again added to payrolls in April, but had trouble keeping up with orders.

"In line with the trends seen for output and new work, Japanese companies expanded their head-counts modestly in April. Overall employment has now risen consistently for just over two-and-a-half years," advised S&P Global. "Signs of capacity pressure persisted, however, as levels of outstanding business increased for the fifth straight month."

Japan's business managers also reported higher costs of operation in April.

Surveyed companies "often highlighted higher prices for staff, raw materials, fuel and energy. The latter were in turn linked to developments in the Middle East and a weak yen exchange rate," said S&P Global.

The Middle East outlook also clouded Japan's business manager optimism in April.

"Business confidence regarding future output weakened for the second successive month in April, with overall optimism the lowest recorded since August 2020 during the COVID-19 pandemic," said S&P Global. "While Japanese firms were generally hopeful that demand conditions will strengthen globally, uncertainty and disruption to markets due to the war in the Middle East dampened forecasts at some firms."

The flash Japan PMI report was is compiled by S&P Global from survey sent to 400 manufacturers and 400 service providers from April 9 through April 21.

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