Japan’s PMI Readings Fall to Multi-Year Lows

The services sector in Japan experienced the fastest contraction ever recorded during March even as manufacturing activity contracted at the fastest pace seen in a decade, as domestic and overseas demand were impacted severely due to the coronavirus pandemic. The au Jibun Bank Flash Japan Manufacturing PMI declined to a seasonally adjusted 44.8 for March from the final reading of 47.8 in the previous month.

The services PMI fell to a seasonly adjusted reading of 32.7 from 46.8 in February. While the manufacturing PMI had touched the lowest reading since April 2009, the services PMI fell to the weakest level seen since the survey started back in September 2007.

New orders received by both manufacturing and services sectors shrank at the steepest rate in around 11 years as domestic demand as well as overseas ones declined because of the outbreak. The flash composite PMI has fallen to 35.8 in March from 47.0 in February, the lowest reading since April 2011.

According to chief economist at IHS Markit, Joe Hayes, the data points to the Japanese economy experiencing an “aggressive downturn”, especially because of the extremely weak performance in the key services industry. The data adds to worries of the economy slipping into recession this year because of the ongoing coronavirus pandemic, and could suffer even more in case the Tokyo Olympics get called off this year.