At 48.2 in July, down from 52.4 in June, the reading was also below the initial estimate of 49.1 and is only the second time since early-2013 that the PMI has fell to a sub-50 level, which signifies market contraction.
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According to the index if the number on the data falls below 50, then that reveals that the sector is contracting, which could contribute towards a another recession, just after the United Kingdom has recovered from the previous slump, the worst in a generation.
In addition new orders fell at a slower pace last month, compared to June, displaying some evidence of resilience from the industry despite concerns over the impact from the Brexit vote. In a sign service firms expect a further improvement this month, they increased headcount at the fastest rate since early 2008.
This final PMI reading for July was unchanged from the earlier preliminary figure.
Services accounted for 70.1 percent of Japan’s gross domestic product, while manufacturing had a 18.7 percent share in 2014.
That is the verdict of financial data company Markit, which said its monthly all-sector Purchasing Managers’ Index saw its steepest month-on-month decline on record after big falls in activity in services, manufacturing and construction firms. “However, the unprecedented month-on-month drop in the all-sector index has undoubtedly increased the chances of the United Kingdom sliding into at least a mild recession”, Williamson added further.
Beijing • Chinese manufacturing activity in July was weak but better than some forecasters expected, two surveys showed Monday.
“However, it’s not all bad news, at least in so far as the decline in construction output was little changed from June’s seven-year low”.
The figures come a day before the Bank of England meets to set rates, with expectations pointing to a quarter-point rate cut.
It also means an interest rate cut at tomorrow’s Bank of England’s monetary policy committee announcement is a “foregone conclusion”, according to Chris Williamson, chief economist at IHS Markit, which conducts the surveys.
National PMI data showed that Germany stayed at the apex of the PMI growth rankings, as output expanded at the fastest pace since April 2014 despite a slight easing in new order growth.
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Growth of new export orders climbed to a six-month high, with increases seen in the consumer and capital goods categories.
