TOKYO -- Japan's headline PMI dipped into contraction territory for the first time in two and half years. Goods producers recorded a sharper downturn in output during February, while new order intakes declined at a quickened pace.
The Nikkei Japan Manufacturing Purchasing Managers' Index, or PMI, pointed to the first contraction in the Japanese manufacturing economy since August 2016 during February. The headline figure fell to 48.9, from 50.3 in January, the lowest in 32 months.
New export business continued to decline amid lower sales to China. As a result, output charges were raised at a slower rate and businesses pared back their output expectations for a ninth successive month.
"Global trade frictions and weak domestic manufacturing demand pose considerable risks to Japan's goods producers," said Joe Hayes, economist at IHS Markit, which compiles the survey. "With the consumption tax hike set to come into play later this year, weak domestic demand will only heighten fears that the economy could be poised for a downturn. Focus turns toward service sector data, which will need to show signs of resilience in order to offset the manufacturing drag."
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