Coronavirus impact: Japan's factory activity contracts at fastest pace in May

Cornelia Mascio
Giugno 1, 2020

The country's manufacturing sector activity recorded another sharp deterioration in business conditions during May as new orders placed with producers continued to fall after April's record contraction, leading firms to cut jobs at the quickest pace on record, a monthly survey said on Monday. The manufacturing PMI marginally increased from 27.4 in April to 30.8 in May despite the partial lifting of lockdown restrictions. In PMI parlance, a print above 50 means expansion, while a score below that denotes contraction.

The official non-manufacturing PMI rose to 53.6 in May, from 53.2 in April, suggesting the sector's business and consumer confidence may slowly be improving.

The new coronavirus pandemic - which has killed more than 370,000 people around the world - has wreaked havoc with supply chains and quashed demand as government-imposed lockdowns forced businesses to close and citizens to stay home.

China is heading for an uneven recovery as businesses emerge from COVID-19 shutdowns. After hitting an eight-month high of 55.3 in January, output had fallen to 51.8 in March.

The easing of lockdowns prompted clients in the United Kingdom and elsewhere to begin the process of reopening, IHS Markit said.

The manufacturing purchasing managers' index (PMI) - compiled from surveys of business activity - rose to 40.7 in May from 32.6 a month earlier, when harsh restrictions brought Britain's economy to an effective standstill. New orders fell for the second-month running.

Weak demand from global markets added to the deteriorating sales trend, with new business from overseas declining further in May. "Anecdotal evidence suggested global measures to stem the spread of covid-19 continued to stifle exports", it added. In April, the rate of contraction in exports had risen sharply and outbound sales had dropped at the quickest pace in over 15 years. "Most industry was closed in April and the effect lingered on till May, Difficult to say it at this point but chance of growth looks slim in the short term given the challenges", said Devendra Pant, chief economist, India Ratings and Research. According to data from the Index of Industrial Production, a collapse in manufacturing sector had led to industrial output falling by 16.7 per cent in March, when lockdown had been in force for just five days.

US manufacturing activity eased off an 11-year low in May, the strongest sign yet that the worst of the economic downturn was behind as businesses reopen, though the recovery from the Covid-19 crisis could take years because of high unemployment.

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