Japan’s factory growth hits four-year high in January, but services contract flashes PMI Reuters

TOKYO (Reuters) – Japanese plant activity grew at its fastest pace in four years in January as production growth rose, despite pressures from persistent chip shortages, rising input prices and a forecast of the coronavirus pandemic.

However, private sector activity as a whole declined for the first time in four months due to the rise in coronary virus cases of the Omicron variant for the first time in the service industry.

Au Jibun Bank Flash Japan Manufacturing Purchasing Managers ’Index (PMI) has risen to seasonally adjusted 54.6 compared to the previous month’s 54.3 final, marking the fastest expansion rate since January 2018.

Manufacturers have reported the fastest rise in production prices since July 2008, with companies increasingly incurring higher input costs, which continued to grow rapidly.

Growth in new sales and demand accelerated after the momentum eased somewhat in the previous month.

But concerns about the Omicron variant have led to a record rise in new coronavirus infections and the re-introduction of COVID-19 restrictions in some parts of the country have severely damaged service sector activity.

The Au Jibun Ban Flash Services PMI index fell to a seasonally adjusted 46.6 from the last 52.1 in December to contract at the fastest pace in five months.

The survey showed that the rate of job losses in the sector accelerated for the second month in a row from May 2020 to its fastest.

“Private sector companies report that the rise in COVID-19 cases, which is a more transmissible variant of Omicron, has hampered customer confidence,” said Usamah Bhatti, an economist at IHS Markit, which includes the survey.

“There was also a breakdown in the labor market, where employment levels fell for the first time in a year.”

Au Jibun Bank Flash Japan Composite PMI, calculated using manufacturing and services, fell to 48.8 from last month’s 52.5 final.