TOKYO (Reuters – Japan’s manufacturing activity grew slowly in February, as the output fell. It is a sign of the extended impact that disruptions in global supply chains are having on the third-largest country in the world.

The services sector saw its activity shrink at the fastest pace since May 2020, as less demand was there after an unprecedented spike in coronavirus cases across the country.

From a previous 55.4, the au Jibun Bank Flash Japan Manufacturing PurchasingManagers’ Index (PMI), fell to a seasonally adjusted 52.9. If the reading is below 50, it means that there has been contraction. A reading above 50 suggests expansion.

“Manufacturers indicated a decline in output for five months,” stated Usamah Bhatti from IHS Markit. This survey is compiled by economists at IHS Markit.

Survey results showed that delivery times had been significantly extended, which caused material shortages to worsen. Input prices have risen at an alarming rate ever since August 2008.

Bhatti reported, “Firms continue to report that rising input price and material shortages – notably in fuels and metals – continued to dampen the private sector activity.”

The survey’s launch in October 2001 saw the fastest increase in raw material stockpiles for manufacturers.

According to the survey, both manufacturers and service-sector companies were less optimistic in their outlook for business conditions over the twelve months ahead.

The PMI Index for au Jibun Bank Flash Services fell to 42.7 after being adjusted seasonally, compared with the previous month’s total of 47.6.

The composite au Jibun Bank Flash Japan Composite PMI (calculated using both manufacturing and service) fell to 44.6, from the January final of 49.9; this is the lowest level since June 2020’s 408