Japan factory PMI falls to 53.3 in October as services improve

Japan’s manufacturing expansion lost momentum in October, reaching its weakest pace in seven months as production and orders grew more slowly, according to S&P Global’s flash survey. The manufacturing Purchasing Managers’ Index dropped from September’s 54.1 to 53.3.

The factory reading remained above 50.0, the threshold separating expansion from contraction. Manufacturers reported the smallest increases in both output and new orders since March. Factory hiring continued at a moderate pace, while increased purchasing pushed stocks of purchases to their biggest buildup in almost four years.

Services strengthened, with the flash Services PMI Business Activity Index climbing from 51.3 to 52.0. The survey showed faster growth in both activity and sales. The Composite PMI Output Index held at 52.3, extending the private sector’s expansion to 19 consecutive months.

Usamah Bhatti, an economist at S&P Global Market Intelligence, said overall activity growth was unchanged from September and remained below its average for the year to date. Across the private sector, new business growth slowed to a three-month low, while export business increased at its weakest rate in four months.

Private-sector job creation was the slowest in 14 months, and confidence about the coming year fell to its lowest since July. Input costs rose slightly faster as raw material and labor costs increased. Companies continued raising selling prices, but the pace of those increases eased to a four-month low.