TOKYO, March 1 Reuters Japan39;s factory activity shrank at the fastest pace in over threeandahalf years in February, a privatesector survey showed on Friday, as weakening demand worsened the economic outlook.

The final au Jibun Bank Japan manufacturing purchasing managers39; index PMI shrank to 47.2 in February from 48.0 in January. It was the ninth straight month of contraction and the fastest pace of decline since August 2020.

The index has remained below the 50.0 threshold that separates growth from contraction in activity since June.

Depressed demand in domestic and international markets continued to weigh on sector performance, said Usamah Bhatti at SP Global Market Intelligence.

Both production and new orders, the two main subindexes of the PMI, declined at the fastest pace in a year. Respondents cited factors such as weak sales demand at home and overseas as well as production delays due to machinery shutdowns.

Export sales extended their falls and have remained in contraction for two years. Weak sales in China was the main factor behind slumps in exports, while those from the U.S. and Europe were also subdued.

Employment shrank at the steepest pace since January 2021 as firms were reluctant to replace voluntary leavers.

Manufacturers also reduced purchasing activity for the 19th straight month in February due to a lack of new orders and high inventory levels.

Delivery times extended to their longest in a year on shipping delays due to disruption in the…