The contraction hit parade keeps humming along.
Business activity in Japan’s service sector decreased for a second successive month during June, as new order growth remained muted.
Meanwhile, manufacturing PMI™ data showed factory output falling for the first time in six months. Consequently, the Composite Output Index (covering manufacturing and services) dipped below the neutral 50.0 threshold in June, down from 50.1 to 49.1, and indicated the first reduction in private sector activity since November 2011. Behind the latest reduction in service sector activity was a worsening of market conditions.
Some firms also commented on muted new business growth. The rate of expansion in new work was marginal, albeit slightly faster than in May. Composite data pointed to the weakest expansion of new work in the current five-month period of growth.
China Composite PMI Stagnates
Markit China Services PMI Activity Growth Eases to Near-Stagnation in June
- Overall new business down for first time in six months
- Composite data showed input prices falling at the fastest rate in 39 months
- Service sector optimism remains subdued
The HSBC Composite Output Index posted 50.6, down from 51.9 in May, and was the lowest reading in three months. The slowdown at the composite level reflected a sharper decline in manufacturing output and a moderation of activity growth in the service sector. The latter was highlighted by the HSBC Business Activity Index falling from 54.7 to a ten-month low of 52.3 in June.
Moreover, the pace of new order growth in China’s service sector eased since the month before, with the index measuring trends in overall new work at a ten-month low. This, coupled with an accelerated decline in new orders placed at goods producers, meant that overall new work fell for the first time in 2012 so far.
Largely in response to muted growth of new business, backlogs of work in the Chinese service sector decreased for a fifth successive month during June.
The rate of decline in work outstanding remained marginal, however. Goods producers also recorded a slight rate of backlog depletion in June.
Mike “Mish” Shedlock
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