Japan's manufacturing sector grew for a fourth straight month in November

Damon Coulter / Barcroft Images / Barcroft Media via Getty Images

Activity levels across Japan’s manufacturing sector continued to improve in November, albeit at a slower pace than October.

The Nikkei-Markit flash manufacturing purchasing managers index (PMI) came in at 51.1, down fractionally on the 51.4 level reported previously.

The PMI measures changes in activity levels from one month to the next. A reading above 50 indicates that they’re improving while a figure below 50 says they’re deteriorating.

Essentially, the higher the number the better.

The “flash” reading, as it is known, comes out a week ahead of the final PMI report, and captures responses from around 85-90% of all firms surveyed.

It’s a fairly good guide based on historic form.

This table from Markit shows how each of the survey’s subindices fared during the month based on responses received so far.

Output, new orders, new export orders and employment all increased, although at a slower pace than October.

Of importance to the Bank of Japan as it continues its battle with deflation, input prices rose while output prices, essentially the price of finished goods, remained unchanged.

There was also good news with inventories of raw materials increasing as those of finished goods fell, a sign that end demand for manufactured goods is improving.

Amy Brownbill, an economist at IHS Markit, said that improved external demand continued to underpin activity levels, leading to a fourth straight month of expansion.

“Data suggested that international demand was the key driver behind the expansion in total new sales,” she said.

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