Investing.com-- Japanese manufacturing activity shrank slightly less than expected in early December, purchasing managers index data showed on Monday, while services sector activity picked up sharply.
The au Jibun Bank Japan manufacturing PMI read 49.5 in the first two weeks of December, compared to expectations of 49.2. The reading improved from 49.0 seen in the prior month.
A reading below 50 indicates contraction, with the manufacturing PMI now shrinking for a sixth straight month.
Japan’s manufacturing sector was battered by a slew of outages at major carmakers, as they grappled with a rapidly growing safety scandal. But production by majors such as Toyota Motor (NYSE:TM) (TYO:7203) was seen slowly recovering in recent months.
Still, the sector is contending with sluggish overseas demand for goods, especially in top export destinations China and the U.S.
This trend could also potentially worsen amid increased trade tariffs under U.S. President-elect Donald Trump.
Local spending, however, remained upbeat. The au Jibun Bank Japan Services PMI rose to 51.4 in December from 50.5 in the prior month, pushing further into expansion territory.
Year-end demand ramped up ahead of the Christmas and New Year holidays, while strong wage growth also supported private spending.
Strength in the services sector also helped overall Japanese business activity expand in December, although manufacturing still remained a drag.