TOKYO, March 1 Reuters Japan39;s factory activity shrank in February at the fastest pace in over two years, a private survey showed, highlighting companies39; struggles amid a global economic slowdown, raw material inflation and policymakers39; calls for higher wages.

The final au Jibun Bank Japan Manufacturing Purchasing Managers39; Index released on Wednesday fell to 47.7 in February from January39;s 48.9. Although higher than the flash reading, it marked the fastest decline since September 2020.

Both new orders and production levels, which make up 55 of the headline PMI figure, fell at the fastest pace since July 2020 as weak domestic demand and a global economic slowdown hindered sales and output volumes, said economist Usamah Bhatti at SP Global Market Intelligence, which compiles the survey.

Manufacturing output and new orders contracted for an eighth consecutive month and at the fastest rates in 31 months, the survey showed.

The final PMI reading comes a day after government data showed Japanese factories slashed output in January at the fastest pace in eight months, dragged down by auto and semiconductor sectors.

The downturn in factory activity is likely to be sustained over the near term, Bhatti said, as the absence of new orders amid dampened client confidence lifted capacity pressure on manufacturers further.

The subindex gauging backlogs of work was at the lowest since September 2020, underscoring the frail customer demand.

Input price inflation…