Japan's factory activity expands at fastest pace in nearly four years - PMI

FILE PHOTO: Steam is emitted from JFE
FILE PHOTO: Steam is emitted from JFE's steel factory in Yokohama, Japan February 13, 2017. REUTERS/Issei Kato/File Photo

TOKYO (Reuters) - Japan's factory activity grew in November at the fastest pace in nearly four years, as manufacturers' output and orderbooks improved on a moderation in critical supply bottlenecks.

Businesses, however, said cost pressures remained an issue as materials shortages and delivery delays caused input prices to surge the most in 13 years.

The final au Jibun Bank Japan Manufacturing Purchasing Managers' Index (PMI) in November rose to 54.5 on a seasonally adjusted basis, marking its fastest pace of expansion since January 2018.

The figure, which compared to the prior month's 53.2 and a 54.2 flash reading, also marked the 10th straight month of expansion in manufacturing activity.

"The Japanese manufacturing sector continued to see an improvement in operating conditions midway through the fourth quarter," said Usamah Bhatti, economist at IHS Markit, which compiles the survey.

Bhatti said manufacturers reported a sustained and marked deterioration in lead times, with evidence suggesting supply chain disruptions continued to hinder activity within the sector.

"Material shortages and logistical disruptions contributed to a rapid rise in average cost burdens, as input prices rose at the fastest pace since August 2008," Bhatti added.

Data on Tuesday showed Japan's industrial output rise for the first time in four months in October as faster car production offset declines in manufacturing of chemicals, steel and other sectors.

The world's third-largest economy is expected to rebound in the current quarter after contracting in July-September as curbs to stem a rise in coronavirus infections hurt household and corporate sentiment.

(Reporting by Daniel Leussink; Editing by Sam Holmes)

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