Investing.com-- Japanese business activity shrank in October, preliminary purchasing managers index data showed on Thursday, with both manufacturing and services sectors contracting through the month.
The au jibun bank flash manufacturing PMI fell to 49.0 in October from 49.7 in September, also missing expectations for a print of 49.9. A reading below 50 indicates contraction, with the sector shrinking for a third consecutive month.
Japan’s manufacturing sector has been facing increased headwinds from production disruptions in the country’s biggest automakers, as they grapple with a growing safety scandal.
Weak local and overseas demand also saw order growth shrink during the month, as did employment.
These factors weighed on service sector activity, which has so far helped keep overall Japanese business activity in expansion. The au jibun bank flash services PMI slid to 49.3 in October from 53.1 in the prior month, falling into contraction for the first time since June.
The fall in services activity saw the composite PMI for October drop to 49.4 from 52.0 in the prior month.
Economists at S&P Global (NYSE:SPGI) attributed the drop to weaker overall economic conditions in Japan, with a recent pick-up in private spending only providing a limited boost to the economy.
Thursday’s readings also showed Japanese companies growing less confident over the economic outlook.