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Investing.com-- Japanese manufacturing activity shrank more than expected in October, contracting at the fastest pace in 19 months as new orders declined, purchasing managers index data showed on Friday.
Service sector activity remained strong and largely offset a downturn in manufacturing, although overall Japanese business activity still grew at its slowest pace in six months.
The S&P Global Flash Japan Manufacturing PMI fell to 48.3 in the first three weeks of October, missing expectations of 48.6 and retreating from the 48.5 seen in the prior month.
The reading was lowest since March 2024, where a print below 50 indicates contraction in the sector.
"The manufacturing sector remained stuck in decline, with the latest survey pointing to the quickest reduction in factory orders for 20 months amid reports of weaker customer demand and relatively sluggish business conditions," said Annabel Fiddes, Economics Associate Director at S&P Global Market Intelligence.
Japanese manufacturing activity has steadily declined this year, pressured primarily by softer exports as high U.S. trade tariffs weighed on overseas demand. Automobiles and steel were among the worst hit by higher tariffs.
The S&P Global Flash Japan Services PMI grew 52.3 in October, slower than the 53.3 seen in Sept but comfortably in growth territory. Domestic and overseas services demand remained strong, given that the sector is also far less exposed to trade tariffs.
Strength in services kept the S&P Flash Japan Composite PMI output index in expansion territory, but growth was at its slowest pace in four months.