Japan's May factory activity grows at slowest rate in 3 months - flash PMI

TOKYO, May 24 (Reuters) - Japan's manufacturing activity expanded at the slowest pace in three months in May, as supply bottlenecks due to parts shortages and China's COVID-19 lockdowns caused output and new orders growth to slow.

Activity in the services sector improved for the second consecutive month on stronger domestic demand due to the fading impact of the pandemic, though service-sector firms faced a drag from the sharpest rise in input prices on record.

The au Jibun Bank Flash Japan Manufacturing Purchasing Managers' Index (PMI) slipped to a seasonally adjusted 53.2 in May from a final 53.5 in April. The 50-mark separates contraction from expansion.

Output and overall new orders both expanded at their slowest rate in three months, as uncertainty over the outlook for price and supply developments lingered.

New overseas orders shrank at the fastest pace since July 2020 in a sign of cooling demand from China, Asia's top economy and Japan's biggest trading partner.

Manufacturers' input prices rose for the 24th straight month at an increasingly fast pace, while delivery times lengthened to the greatest extent since April 2011.

"Private sector firms reported that the reduced impact of COVID-19 had lifted services activity, most notably in the tourism sector," said Usamah Bhatti, economist at S&P Global Market Intelligence, which compiles the survey.

"That said, the renewed introduction of lockdown measures across China and economic sanctions placed on Russia amid the Ukraine war had exacerbated supply chain disruptions, with greater reports of material shortages and severe delivery delays."

The au Jibun Bank Flash Services PMI Index improved to a seasonally adjusted 51.7 in May from the prior month's 50.7 final, pushing up the composite index despite the slower manufacturing activity expansion.

The au Jibun Bank Flash Japan Composite PMI, which is calculated by using both manufacturing and services, rose to 51.4 from a final of 51.1 in April.

Reporting by Daniel Leussink; Editing by Sam Holmes

Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.

All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.

Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.

We are using cookies to give you the best experience on our website. Read more or change your cookie settings.

Risk Warning: Your capital is at risk. Leveraged products may not be suitable for everyone. Please consider our Risk Disclosure.