TOKYO, Feb 21 (Reuters) - Japan's manufacturing activity
contracted at the fastest pace in 30 months in February, a
business survey showed on Tuesday, in a worrying sign for the
world's third-largest economy, which is facing weakening demand
and struggling to tame cost pressures.
The au Jibun Bank flash Japan manufacturing purchasing
managers' index (PMI) fell to a seasonally adjusted 47.4 in
February, from a final 48.9 in the previous month.
The index stayed below the 50-level that separates
contraction from expansion for a fourth consecutive month and
marked the largest decline since August 2020's 47.2.
Factory output and new orders decreased for an eighth
straight month and at faster rates than January, the sub-index
data showed.
Export orders logged the biggest decrease since July 2020 on
relentlessly weak global demand as seen in recent indicators
such as the slower-than-expected gross domestic product growth
in October-December and January's record trade deficit.
By contrast, service-sector activity grew for a six month
with further relaxation of domestic COVID-19 countermeasures.
The government last month said it would downgrade the
coronavirus's public health classification in May.
The au Jibun Bank flash services PMI rose to an
eight-month-high of 53.6 seasonally adjusted in February from
the previous month's 52.3 final.
"Service providers posted sharper rises in activity and new
business as the latest wave of the COVID-19 pandemic faded,
providing a boost to demand," said Andrew Harker, economics
director at S&P Global Market Intelligence, which compiles the
survey.
But service firms' input costs rose at the fastest pace in
eight months, while the inflation for prices they charged to
customers only advanced to a two-month-high, indicating thinner
profits.
"Companies will be hoping to see price pressures ease
meaningfully in the coming months to provide some support to
customer demand," said Harker.
Despite the challenged cost environment, service operators'
confidence improved with the business sentiment sub-index rising
from a 10-month-low.
Overall, the au Jibun Bank Flash Japan composite PMI was at
50.7 in February, in line with last month's final figure, as the
gloomy manufacturing index was offset by a rosy service PMI.
(Reporting by Kantaro Komiya; Editing by Sam Holmes)
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