Japan factory activity growth picks up in October – PMI

TOKYO, Nov 1 (Reuters) – Japan’s factory activities grew at their fastest pace in six months in October. This is an encouraging sign for the world’s third-largest economy as it grapples with the challenges posed by ongoing global commodity and chip shortages.

A survey of the private sector found that manufacturers said material shortages and supply disruptions continued to affect their operations, leading to the sharpest rise in input prices in more than 13 years.

Jibun Bank Japan’s final manufacturing purchasing managers’ index (PMI) rose to 53.2 in October on a seasonally adjusted basis, from 51.5 the previous month, rising for the ninth straight month.

The total, slightly above the lightning 53.0, was supported by a return to growth in production and total orders, although their rate of expansion was moderate and supply issues continued to weigh.

“Manufacturers continued to raise concerns about a significant supply chain disruption that dampened production and demand,” said Usamah Bhatti, an economist at IHS Markit, which compiled the survey.

“Material shortages and delays in deliveries caused input prices to rise sharply… This contributed to higher fees for customers to cover their margins, with ex-factory inflation rising to a 13-year high.”

dates last week showed that Japan’s factory output contracted for the third straight month in September as the auto sector was hit by global supply shortages, raising the risk of an economic slowdown in the third quarter and threatening the recovery.

On a positive note for consumption, the total for the consumer goods PMI survey rose to the highest since May 2019, according to HIS Markit, as businesses were helped by the easing domestic impact of the coronavirus pandemic.

Manufacturers also remained optimistic about the production outlook for the coming 12 months, indicating that companies had high hopes for better conditions.

The overall level of positive sentiment reached its highest level since data was first collected in July 2012.

Reporting by Daniel Leussink. Edited by Shri Navaratnam

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