Japan's private sector experienced a deceleration in growth for September, with manufacturing output slipping back into contraction, according to recent survey data from S&P Global.
The au Jibun Bank flash composite output index decreased slightly to 52.5 in September, from 52.9 in August.
While the services sector continued to grow, reaching a five-month peak, manufacturing output contracted for the second time in the last three months.
The preliminary services Purchasing Managers' Index (PMI) inched up to 53.9 from 53.7 in August. Conversely, the manufacturing PMI fell slightly to 49.6 from 49.8.
Usamah Bhatti, an economist at S&P Global Market Intelligence, noted that the sustained growth momentum throughout the third quarter could signal a stronger GDP performance for the period.
Despite the composite PMI's recent inconsistencies as an indicator of GDP growth, it still suggests, based on historical data, an annual GDP growth of just under 1 percent. This contrasts positively with the 1.0 percent annual decline observed in the second quarter, as highlighted by Capital Economics' economist Marcel Thieliant.
The survey also revealed that new order growth remained relatively unchanged, and there was a continued decrease in backlogged work. Although business sentiment stayed high, the level of confidence dropped to its lowest since April 2022.
In terms of prices, input cost inflation slowed to a six-month low. However, output price inflation saw an uptick in September, driven by higher charges from service providers.
