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Japan’s Manufacturing Sector Contraction Eases in October

Manufacturing activity across Japan continued to decline into October – marking the 18th consecutive month of contraction, amid a resurgence in coronavirus cases around the world. The au Jibun Bank Flash Japan Manufacturing PMI edged slightly higher to 48 from last month’s final reading of 47.7, but remained under the 50-threshold indicating contraction.

On a positive note, however, this has been the slowest pace of decline seen so far this year. The improvement was driven by an uptick in new orders as well as overall output. However, with most parts of the world battling the second wave of the pandemic, there are concerns that this improvement may be short-lived.

Even as the pace of contraction in the manufacturing slows down, the Japanese services sector still seems to be in trouble, contracting at a faster pace in October than in the previous month. The au Jibun Bank Flash Services PMI fell to 46.6 from September’s final reading of 46.9.

Principal economist at IHS Markit, Bernard Aw, observes, “The Japanese private sector started the fourth quarter on a weak footing. The recovery is slow-going and could remain so in the coming months as a global resurgence of COVID-19 cases could weigh on Japanese economic activity, particularly in the external-facing sectors.”

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Arslan Butt
Index & Commodity Analyst
Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.
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