Japan's manufacturing activity in March increased compared to the previous month as falling Covid-19 cases in the country helped lift orders and production. However, Russia's war in Ukraine clouded the prospects for further escalation.
Citing Reuters (24/3), the au Jibun Bank Flash Japan Manufacturing Purchasing Managers' Index (PMI) rose to a seasonally adjusted 53.2 in March from the last 52.7 in the previous month.
The survey showed output rebounded from contraction in the previous month. Meanwhile, new orders activity expanded, albeit at its slowest rate in six months.
However, the conflict in Ukraine and soaring oil and raw material prices could undermine momentum for the world's third-largest economy, even as infections of the Omicron variant slow.
"Input prices rose at their fastest pace since August 2008 with businesses attributable to soaring raw material prices, particularly energy, oil and semiconductors amid deteriorating supplier performance." said Usamah Bhatti, economist at IHS Markit.
The au Jibun Bank Flash Services PMI Index rose to a seasonally adjusted 48.7 from 44.2 last February to mark the third straight month of contraction.
au Jibun Bank Flash's Japan Composite PMI, which is calculated using both manufacturing and services, also shrunk for the third straight month, rising to 49.3 from last month's final 45.8.
Bhatti also said that Japanese companies had reported weaker optimism for the next 12 months in March. "Positive sentiment is the weakest for 14 months amid concerns about the economic impact of the Russia-Ukraine conflict." he concluded.
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