Japan’s Composite PMI slipped to 48.1 in May, down from 51.0 in April, according to the IHS Markit press release. The PMI indicates a return to recession, one month after the economy expanded in April on tightening of COVID containment measures.
The service sector extended contractions, with PMI falling further from 49.5 in April to 45.7 in May.
The Manufacturing Output Index remained in the expansion zone for the fourth month but declined from 54.3 in April to 53.1 in May.
The slip in composite PMI comes amid the reintroduction of a state of emergency in several zones since April, which are expected to be lifted at the end of May.
Japan’s COVID containment measures tightened to the highest level since June last year, adversely affecting the composite output index.
New orders experienced the fastest declines since February.
Japanese firms expect output to grow in the next 12 months across service and manufacturing sectors on the improvement of external conditions and vaccine rollouts.
Employment optimism also grew, with service and manufacturing sectors expected to continue adding payroll numbers.
Japanese stocks and the Yen are currently gaining. Nikkei 225 is up 0.25%, USDJPY is down 0.03%.
