Japan’s manufacturing activity accelerated in November, helped by growing exports and improvement in local conditions for manufacturers, a preliminary business survey showed Tuesday. The expansion was the sharpest spike seen by Japanese manufacturers since March 2014.
The closely watched Nikkei/Markit Flash Purchasing Managers' Index (PMI) reading for November came in at 52.8, from 52.4 in October. A reading of higher than 50 indicates expansion in the sector. The index, which measures the economic health of the manufacturing sector, takes into account factors like exports, employment numbers, inventory backlog and prices, among others.
The PMI indicates Japan’s gross domestic product has started growing, as new orders for exports surged in November and backlogs decreased. Data released by Tokyo in November showed that the country had slipped into a technical recession for the second time under Prime Minister Shinzo Abe’s rule.
November's uptick in employment numbers and overseas demand suggests that the Japanese manufacturing sector has overcome some of the effects of a slowing Chinese economy.
“The latest survey data indicated a marked improvement in operating conditions at Japanese manufacturers. Production increased at the joint-sharpest rate since February and was marked in the context of historical data,” Markit economist Amy Brownbill said, in the report. “Subsequently, both employment and buying activity rose during the month, offsetting the declines seen in September," she added.
Meanwhile on the pricing front, costs to manufacturers, also known as input costs, climbed at the fastest rate in four months in November despite a muted inflation.
The final manufacturing PMI figures will be released on Dec. 1 by financial information services provider Markit.