The private sector in Japan entered a contraction phase in October for the first time in four months, according to the Purchasing Managers' survey by S&P Global, released on Thursday.
The au Jibun Bank preliminary composite output index recorded a decline to 49.4, down from 52.0 in the previous month. An index reading below the crucial 50 threshold signals contraction.
Both the manufacturing and services sectors experienced shrinkage in October, attributable to a sluggish economy and a decline in new order inflows.
Indicating a notable worsening in manufacturing conditions, the preliminary factory Purchasing Managers' Index decreased to 49.0, compared to 49.7 in September.
The preliminary services PMI noted a significant drop to 49.3 from 53.1 in September, marking the steepest decline since February 2022.
Following a quarter of expansion, new business received by companies moderately declined in October. Domestic orders decreased due to diminished activity, while international orders saw their most significant fall since February 2023.
Business activity growth expectations for the next twelve months have softened, reaching their lowest level since August 2020. Respondents attributed this to the prevailing economic challenges and persistent high prices, which negatively affected sentiment.
Companies reported a stronger rate of output charge inflation for the second consecutive month, surpassing the average for the series.
