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Japan’s Manufacturing PMI Contracts for the Fifth Consecutive Month

A report from Jibun Bank reveals that Japan’s manufacturing sector has contracted for the fifth straight month in October, while the service sector recorded its slowest growth rate this year. These findings add to the mounting uncertainty about Japan’s economic outlook.

Jibun Bank’s preliminary manufacturing Purchasing Managers’ Index (PMI) for October remained stagnant at 48.5, registering below the critical threshold of 50. This figure indicates that Japan’s manufacturing activity is still in contraction mode, continuing a trend that began in June. The data shows that output experienced its sharpest decline in eight months, largely attributed to a drop in new orders.

In contrast, the preliminary services PMI declined further, falling to 51.1 in October from September’s 53.8. This represents the slowest pace of growth in the service sector since the beginning of the year. Typically, a PMI figure above 50 suggests an expanding service sector.

Combining both the manufacturing and services sectors, the overall PMI plummeted to 49.9 in October from September’s 52.1, marking the first contraction since December.

As Japan faces the prolonged challenge of a contracting manufacturing sector and a decelerating service sector, economists and policymakers are closely watching these indicators for potential impacts on the broader economy. The consistent contraction in manufacturing and the sluggish service sector growth raise concerns about the overall health of Japan’s economy and the need for targeted interventions to stimulate growth.

Analysts expect that ongoing economic uncertainties, both domestically and internationally, are contributing to the challenges faced by Japan’s economy. Consequently, all eyes will be on the evolving data to gauge the effectiveness of potential policy measures in the coming months.

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