Contraction in Japan’s factory activity bogs down in slowest pace in five months

Contraction in Japan’s factory activity bogs down in slowest pace in five months

Japan’s factory activity shrank for a ninth-month straight in January at the slowest pace in five months. Economists speculate the slowing of pace to be reflecting the positive feedback of the U.S.-China Phase One deal and alleviating fears of a recession.

The Jibun Bank Flash Japan Manufacturing Purchasing Managers’ Index (PMI) edged up to a seasonally adjusted 49.3 from a final 48.4 in December.

The index stayed below the 50.0 threshold that separates contraction from expansion for a ninth month – the longest stretch since a nine-month run to February 2013.

The Jibun Bank Flash Japan Services PMI index came in at a seasonally adjusted 52.1 from the previous month’s 49.4, edging closer to a nearly two-year high of 53.3 in August. It later turned 51.1 in January from the previous month’s final of 48.6, marking the fastest expansion in four months.

Many economists expect the world’s third largest economy to have contracted in the October-December quarter due to the fallout of the U.S.-China trade war and the tax hike impact. Currently, it is seen recovering albeit moderately at the start of this year.