Japan's factory activity expands in May

Service-sector activity expanded at the strongest pace on record in May

Japan's manufacturing activity expanded for the first time in seven months in May, while the service-sector hit record growth, a survey showed yesterday, as the POST-COVID recovery shored up business conditions.

The au Jibun Bank flash Japan manufacturing purchasing managers' index (PMI) rose to a seasonally adjusted 50.8 in May, from a final 49.5 in April. It's the PMI'S first reading above 50, which separates contraction from expansion, since October.

Output and new orders also returned to expansion territory for the first time since last June.

Manufacturers in the survey suggested supply chain disruption brought by the pandemic which battered the sector showed "signs of improvement".

"The Japanese private sector economy continued on an upward trajectory," said Usamah Bhatti, economist at S&P Global Market Intelligence, which compiles the survey.

"Service providers continued to report strong growth momentum with a renewed record increase in business activity, while manufacturers indicated an improvement in operating conditions for the first time in seven months," he said.

Service-sector activity expanded at the strongest pace on record in May led by the restart of both domestic and international tourism and continued recovery from pandemic disruptions, the survey showed.

The au Jibun Bank flash services PMI advanced to a record seasonally adjusted 56.3 in May, from 55.4 in the previous month.

The service-sector also showed record expansion in other areas such as total new business, exports and outstanding business.

Data showed last week that visitors to Japan rose to a post-pandemic high of almost two million in April, benefiting from a relaxation of outbound travel restrictions in China.

The au Jibun Bank Flash Japan composite PMI, which covers both manufacturing and service sector activity, stood at 54.9 in May, the highest reading since October 2013.