Japan’s factory activity declines in March

Japan’s factory activity fell at a slower pace in March, while the service sector continued to expand, supporting overall growth in the private sector, Reuters reported on Thursday.

This comes after the Bank of Japan‘s (BOJ) recent policy shift to end radical stimulus and raise interest rates for the first time in 17 years.

The flash au Jibun Bank Japan manufacturing purchasing managers’ index (PMI) increased to 48.2 in March from 47.2 in February. While the index is still below the 50 index level that separates growth from contraction since June, the pace of deterioration was the softest in four months.

On the other hand, service providers experienced a strong expansion, with activity growing at the fastest pace in 10 months.

Demand conditions for private sector firms improved in March, as reflected in the rise of the au Jibun Bank flash services PMI to 54.9, the highest level since May 2021.

However, the survey also highlighted increased price pressures on the private sector, with input cost inflation reaching the highest level since September.

Price pressures in the manufacturing sector remained high but showed a slight easing compared to previous months.