Manufacturing conditions in Japan improved substantially in November. Both production and new orders increased at marked rates, with the former expanding at the fastest rate since March 2014. Subsequently, both employment and buying activity expanded during the month. On the price front, input prices increased at the
fastest rate since July, although remained historically muted. Meanwhile, prices charged rose for the first time in three months.
The headline PMI posted at 52.6, up from 52.4 in October, thereby indicating a marked improvement in operating conditions at Japanese manufacturers. Moreover, the index posted the highest reading in 20 months, which mainly reflected a quicker expansion in production.
Contributing to the overall improvement in manufacturing conditions was a sharp rise in production. The rate of increase was the quickest since March 2014, with 23% of surveyed companies noting higher output compared to October. According to panellists, greater demand, new product launches and extra staff led to an
expansion in production. At the sector level, all three monitored sub-sectors indicated growth in output.
Concurrently, new orders increased at a marked rate during the month. Firms linked greater new work intakes to success in gaining new clients and new product developments. Total new order growth was supported by strong international demand as new export orders rose at the fastest rate since June. A number of surveyed companies mentioned greater demand from new customers, particularly from Asia.
To help manage increased production requirements, manufacturers hired additional staff in November. Moreover, the rate of job creation was little changed from October’s 18-month record. As well as greater output, some firms linked employment growth to staff reinforcement.
Meanwhile, buying activity increased at the fastest rate in over a year. Companies linked higher purchases to new product developments stimulating greater demand. Inflationary pressures strengthened in November as reports of higher raw material costs stemming from the falling yen/dollar rate continued to drive up cost burdens. Subsequently, manufacturing charges rose at the joint-fastest rate since January, as firms tried to pass on their higher input costs.