TOKYO, Feb 1 (Reuters) – Japan\u2019s factory activity slipped back into contraction in January, starting the year on a sour note as a rise in COVID-19 infections and a new state of emergency in the country hit operating conditions.<\/p>\n
Manufacturers reported a renewed fall in output volumes, according to the private-sector data, sharply contrasting with Friday\u2019s more upbeat government estimates that showed producers expecting a sharp rebound in output in January.<\/p>\n
The final au Jibun Bank Japan Manufacturing Purchasing Managers\u2019 Index (PMI) fell to a seasonally adjusted 49.8 in January from the prior month\u2019s stable 50.0 reading.<\/p>\n
The fall in the headline figure, which was a notch above a preliminary 49.7 reading, was mainly due to a new slump in employment and output.<\/p>\n
Firms attributed the production falls to restrictions implemented under the state of emergency called by Prime Minister Yoshihide last month, which covers Tokyo and other areas accounting for 55% of the nation\u2019s population.<\/p>\n
\u201cDespite broad stabilisation in December, the decline in January meant that the sector has not registered growth since April 2019,\u201d said Usamah Bhatti, economist at IHS Markit, which compiles the survey.<\/p>\n
\u201cManufacturers indicated a renewed fall in output levels in the latest survey period. Moreover, firms were further discouraged to replace voluntary leavers in the sector as staffing levels reduced in January.\u201d<\/p>\n
The PMI survey showed other indicators such as suppliers\u2019 delivery times and new export orders dropped at their fastest pace in seven and four months, respectively, as COVID-19-related supply chain disruptions weighed.<\/p>\n
Growth expectations for the year ahead remained positive for the eighth consecutive month as hopes of an end to the pandemic and a wider economic recovery underpinned sentiment.<\/p>\n