Japan business activity rises in November as services remain resilient

Japan's private sector growth strengthened in November, driven by resilient services activity despite ongoing weakness in manufacturing, preliminary figures from S&P Global revealed Friday.

The S&P Global Japan flash composite purchasing managers' index rose to 52.0 in November, up from 51.5 in October.

A reading above the 50.0 neutral mark indicates an overall increase in business activity month-on-month, while a reading below signals a contraction.

Specifically, the flash services PMI held steady at 53.1 in November, unchanged from the previous month.

Meanwhile, the flash manufacturing PMI edged up to 48.8 in November from 48.2 in October, and the output index climbed to 49.6 from 48.3, suggesting a slower pace of contraction.

Annabel Fiddes, economics associate director at S&P Global Market Intelligence, said: "The flash PMI surveys for Japan indicated a further improvement in growth momentum in November, with overall private sector output rising at the quickest pace in three months...However, it was encouraging to see that manufacturing output fell at the softest pace since August, to suggest operating conditions there are moving towards stabilisation."

Overall employment across Japan's private sector increased for the 26th month in a row and at a quickest rate since June.

Fiddes added: "There were also other positive developments that signalled a stronger outlook for the economy. Notably, business confidence regarding future output improved to the highest level since January, which in turn helped to drive the strongest increase in employment since June as firms looked to expand capacity to support future growth plans.

"Inflation remains a key concern, however, with average input costs rising at the quickest rate in six months amid reports of higher labour costs and supplier price hikes. As a result, firms raised their own selling prices and at a solid pace, as they looked to protect their margins."

S&P Global compiles the PMI figures monthly using survey responses from around 400 manufacturers and 400 service-sector companies. The flash readings released in advance are typically based on approximately 85% to 90% of the survey respondents.