US and Japan Manufacturing Sectors Face Contraction

The US manufacturing sector slipped back into contraction in March due to rising materials costs linked to tariffs, while the service sector's outlook also worsened despite a rise in output from stronger demand. Concurrently, Japan's factory activity fell at its fastest pace in a year, with the au Jibun Bank Japan Manufacturing PMI dropping to 48.3, marking the ninth consecutive month of contraction. Japan's service sector, which had previously been a bright spot, also contracted for the first time in five months, with the PMI falling to 49.5. Inflationary pressures, labor shortages, an aging population, and global trade uncertainties are contributing to a gloomy business outlook in Japan. Both countries are experiencing significant economic challenges, with persistent inflation and cost pressures further complicating the recovery process.