TOKYO (Reuters) – Japan’s factory activity contracted for the fifth straight month in November due to sluggish demand caused by worries over China’s economic slowdown and persistent cost pressures, a private-sector survey showed on Friday.
The au Jibun Bank flash Japan manufacturing purchasing managers’ index (PMI) slipped slightly to 49.0 in November from 49.2 in October.
The index stayed below the 50.0 threshold separating growth from contraction for a fifth straight month.
“Demand conditions at private sector companies were stagnant during November,” said Usamah Bhatti, economist at S&P Global Market Intelligence, which compiled the survey.
The subindex for output contracted for the third straight month in November and that of new orders also shrank for the month, staying below the 50.0 threshold since June last year. Manufacturers also reduced employment for the first time since February, the survey found.
Input inflation remained high in November though price growth slowed to a seven-month low, while the rate of output prices grew to the strongest since July.
“Price pressures remained elevated across the Japanese sector, with a large number of respondents mentioning higher raw material prices and the weakness of the yen,” said Bhatti.
The au Jibun Bank flash services PMI grew to 50.2 in November, reversing its slight contraction of 49.7 in October.
Outstanding business grew at the fastest pace in eight months, signalling pressure on capacity.
The au Jibun Bank flash Japan composite PMI, which combines both manufacturing and service sector activity, was 49.8 in November, the second straight month of contraction but modestly up from 49.6 in October.
A Reuters’ survey earlier this month found Japanese manufacturers were less confident about business conditions in November than in October, as China’s economic slowdown and higher costs dented sentiment.
Japan’s economic growth slowed in July-September from the previous quarter due to tepid capital spending though a pickup in consumption added a bright spot.
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