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Japan Private Sector Continues To Contract In November

Japan's private sector continued to contract in November but moved closer to stagnation, survey data from IHS Markit showed Friday.

The Jibun Bank flash composite output index rose to 49.9 in November from 49.1 in October. A score below 50 indicates contraction in the sector.

October PMI data was difficult to interpret as a result of the temporary negative shocks caused by the sales tax and typhoon, Joe Hayes, an economist at IHS Markit said.

"However, we can now deduce from the November PMI data that there is a strong possibility of Japan's economy contracting in the fourth quarter," the economist said.

The manufacturing Purchasing Mangers' Index came in at 48.6 versus 48.4 a month ago. The score has remained below 50 for the seventh month in a row.

The services PMI advanced to 50.4 from 49.7 in the previous month. Nonetheless, the marginal growth was notably slower than the average seen over the first three quarters of the year.

Slack in export demand, the protracted US-China trade war and limited policy levers stack up against the chances of improvements in Japan's economy, Hayes added. Without any drive from the service sector, a quarterly contraction in fourth quarter seems highly likely.

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