Japan's manufacturing activity in April expanded at the fastest pace in over a year, helping to offset weaker growth in the services sector, according to Thursday's purchasing managers' index data.
The preliminary S&P Global PMI index for Japan's manufacturing sector jumped to 54.9 in April from 51.6 in March, beating the forecast of 51.1.
The production output index surged to 55.4 from 52.1, marking the strongest production increase since February 2014, as companies ramped up output amid concerns over supply chain disruptions related to the conflict in the Middle East.
However, the overall growth of the private sector has slowed. The preliminary composite PMI index decreased to 52.4 from 53.0, indicating the slowest expansion pace in four months, although it remains above the 50 threshold that separates growth from contraction.
The services sector lagged: the services PMI index fell to 51.2 from 53.4, hitting the weakest level in nearly a year amid waning demand growth.
New orders grew moderately, bolstered by stronger manufacturing orders, while export growth slowed to a four-month low. Meanwhile, price pressures intensified: raw material prices rose at the fastest pace since January 2023 due to increasing fuel and raw material costs.
Business confidence has dropped to the lowest level since August 2020, reflecting uncertainty due to the Middle East conflict and potential supply chain disruptions.
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