Investing.com-- Japanese manufacturing activity shrank more than expected in February, preliminary data showed on Thursday, while service sector activity grew at a slower pace as the broader economy remained under pressure from sticky inflation.
The au Jibun Bank Flash Manufacturing output purchasing managers index (PMI) read 47.2 the first three weeks of February. The reading was weaker than expectations of 48.2, and also slowed further from the 48.0 seen in January.
A reading below 50 indicates contraction, with Thursday’s reading marking Japan’s worst contraction in manufacturing activity in a year.
The au Jibun Bank Flash Services PMI fell to 52.5 in February from 53.1 in the prior month, signaling a slower pace of growth.
This saw the composite PMI fall to 50.3 in February from 51.5 in January, with a bulk of the contraction coming from sustained weakness in manufacturing.
“The Japanese private sector economy saw the slight improvement at the start of the year all but evaporate during February as business activity broadly stagnated,” Usamah Bhatti, economist at S&P Global Market Intelligence said in a note.
The Japanese economy is grappling with a sustained slowdown in consumption and production, and had unexpectedly entered a technical recession in the fourth quarter of 2023.