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Japan's factory activity decline accelerates in November as pandemic drags on - PMI

·2-min read
FILE PHOTO: Employee works at Japanese brewer Kirin Holdings' factory in Toride
FILE PHOTO: Employee works at Japanese brewer Kirin Holdings' factory in Toride

TOKYO (Reuters) - Japan's manufacturing decline sped up in November as output and orders sagged, a business survey showed on Friday, underscoring the fragile nature of the economic recovery from the COVID-19 crisis.

The au Jibun Bank Flash Japan Manufacturing Purchasing Managers' Index (PMI) fell to a seasonally adjusted 48.3 from a final 48.7 in October, staying below the 50.0 threshold that separates contraction from expansion for a 19th straight month. It was the first time in six months the pace of decline has accelerated.

The PMI survey showed key components such as output as well as total new and export orders contracted at a more rapid pace than in the previous month, highlighting the drag the health crisis continued to place on export-reliant economies such as Japan's.

The November index contrasts with more upbeat official data such as third quarter gross domestic product, which showed Japan emerging from its biggest postwar slump. Trade data for October, meanwhile, showed the nearly two-year run of monthly export declines slowing significantly.

"Looking ahead, the path to recovery remains fraught with challenges," said Bernard Aw, principal economist at IHS Markit, which compiles the survey.

"A renewed rise in the number of COVID-19 cases worldwide could dampen global economic activity and trade, thereby putting Japanese exporters in a tough situation."

The PMI survey also pointed to worsening conditions in the services sector, with activity contracting at a much faster pace than in the previous month.

The au Jibun Bank Flash Services PMI index dropped to a three-month low of 46.7 on a seasonally adjusted basis from October's final of 47.7.

The au Jibun Bank Flash Japan Composite PMI, which includes both manufacturing and services, stood at 47.0 in November, down from the previous month's final of 48.0.

(Reporting by Daniel Leussink; Editing by Sam Holmes)