TOKYO: Activity in Japan's manufacturing sector slowed in March, as orders and output cooled in an early sign of the Middle East conflict's impact on Japanese businesses, a survey showed on Tuesday.
* The S&P Global flash Japan Manufacturing Purchasing Managers' Index (PMI) fell to 51.4 in March from a near four-year high of 53.0 in February.
* A key sub-index for factory output expanded at a slower rate compared with February. Orders, including from overseas customers, posted their weakest gain in three months since they returned to growth in January.
* The data come as Japanese manufacturers grapple with rising costs driven by a weak yen and geopolitical tensions. Input cost inflation accelerated to the fastest rate in more than a year, pressured by increased energy and labour expenses, according to the survey.
* The services sector also experienced a slowdown, with the flash Japan services PMI decreasing to 52.8 from 53.8 in February, although the indicator extended its growth streak for a 12th month. PMI readings above 50 indicate growth in activity, while those below 50 signal contraction.
* The flash Japan composite PMI, which combines manufacturing and services activities, was down to 52.5 in March from 53.9 in February, its slowest rise in three months.
* Looking ahead, Japanese manufacturers' level of optimism about future output was still above any month last year, while service-sector sentiment has cooled to the lowest since August 2020 due to the uncertain geopolitical landscape.
* Annabel Fiddes, economics associate director at S&P Global Market Intelligence, said: "With so much uncertainty around the length and impact of the Middle East war, firms were less confident around future output. Optimism among services companies fell more notably than across the manufacturing sector, however, with the latter hoping that stronger global demand across key industries such as AI, defence and semiconductors will continue to drive growth in the months ahead." - Reuters
