Japan's September factory activity grows at slowest pace in 7 months - PMI

FILE PHOTO: An employee wearing a protective face mask and face guard works on the automobile assembly line at Kawasaki factory of Mitsubishi Fuso Truck and Bus Corp, owned by Germany-based Daimler AG, in Kawasaki, south of Tokyo, Japan May 18, 2020. REUTERS/Issei Kato

TOKYO (Reuters) - Japan's factory activity grew at the slowest rate in seven months in September as overall output and new orders shrank due to the fallout from the coronavirus pandemic, a survey showed on Friday.

Manufacturers faced pressure from pandemic restrictions and heightened supply chain disruptions as well as shortages of raw materials and delivery delays.

The final au Jibun Bank Japan Manufacturing Purchasing Managers' Index (PMI) in September slipped to 51.5 on a seasonally adjusted basis from 52.7 in the previous month.

That marked its slowest pace of expansion since February although it was up slightly from a 51.2 flash reading.

The PMI survey showed overall output contracted at the fastest pace in a year, as rising COVID-19 cases and raw material shortages led to lower production levels, while new orders shrank at the fastest pace since November.

"Supply chain disruption continued to dampen activity and demand," said Usamah Bhatti, economist at IHS Markit, which compiled the survey.

"Firms noted a sharp deterioration in vendor performance as supplier delivery times lengthened to the greatest extent since April 2011."

Manufacturers reported a sustained jump in input prices, which rose at the fastest pace since September 2008.

"Positively, external markets reversed the decline seen in August to return to expansion territory, although the rate of growth was only mild," Bhatti said.

(Reporting by Daniel Leussink; Editing by Sam Holmes)

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