Investing.com-- Japanese manufacturing activity shrank for the eighth consecutive month in February as labor shortages and persistent inflation eroded sector sentiment, preliminary purchasing managers index data showed on Friday, while services sector activity picked up slightly.
The au Jibun Bank manufacturing purchasing managers’ index (PMI) came in at 48.9 in February, below the forecast of 49.0. It was slightly higher compared to January’s contraction of 48.7.
A reading below 50 indicates contraction.
The decline in both output and new orders slowed during the month, but ongoing weakness in the sector led manufacturers to reduce employment for the first time since November, data showed.
The level of positive sentiment regarding the 12-month outlook for output slipped to the lowest since June 2020, the survey statement showed.
"Companies cited labour shortages, persistent inflation, and economic malaise in the domestic economy as factors dampening overall sentiment," said Usamah Bhatti, economist at S&P Global (NYSE:SPGI) Market Intelligence, which compiled the survey.
Meanwhile, the au Jibun Bank services PMI inched higher to 53.1 in February, from 53.0 in the previous month.
Service providers frequently noted that increased demand and company expansion plans contributed to higher activity and sales, the survey showed.
The au Jibun Bank flash Japan composite PMI, which weighs both manufacturing and services PMI increased to 51.6 in February from 51.1 in the prior month.