Japan's Manufacturing and Services Sectors Contract at Faster Pace

Japan’s Manufacturing and Services Sectors Contract at Faster Pace

Posted Friday, November 20, 2020 by
Arslan Butt • 1 min read

Factory activity across Japan contracted at a faster pace during November due to a decline in output and orders, raising worries about economic recovery in the wake of the coronavirus crisis. The au Jibun Bank Flash Japan Manufacturing PMI slipped to a seasonally adjusted reading of 48.3 for November from 48.7 in October, remaining under the 50-threshold indicating contraction for the 19th consecutive month.

November’s reading was the first one in six months where the pace of decline picked up instead of easing. The weakness in the sector was driven by a reduction in manufacturers’ output in addition to a steeper decline in total new and export orders received by Japanese manufacturing firms.

Meanwhile, the services sector in Japan also saw a faster pace of contraction, with the au Jibun Bank Flash Services PMI falling to 46.7 in November from October’s final reading of 47.7. The flash Composite PMI has also registered a decline, from 48 in October to 47 in November.

Principal economist at IHS Markit, Bernard Aw, observes, “Looking ahead, the path to recovery remains fraught with challenges. 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.”

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