- Takeshi Minami, chief economist at Norinchukin Research Institute
Japan's manufacturing sector continued to expand, albeit at a slower pace, pointing to a modest recovery after the nation's economy unexpectedly fell into recession. The final Markit/JMMA Manufacturing PMI came in at 52.0 in November, compared with a preliminary reading of 52.1 and down from a final 52.4 last month. Nevertheless, the indicator remained above the 50-mark threshold, which indicates expansion in the sector. The output sub-component of the PMI gauge rose to 52.7 from 51.3 in October, while new export orders increased for a fifth consecutive month, albeit at a markedly slower pace than a month earlier.
The Japanese economy slipped into recession in the three month through September as April's sales tax hike appeared to have a more prolonged and devastating impact than expected on consumer spending and business investment. However, analysts forecast the economy to return to growth in the final quarter of 2014, but concerns about the strength of the recovery of the world's third biggest economy persist. As a result, the Moody's rating agency cut Japan's sovereign rating by one notch as it doubts Prime Minister Shinzo Abe's economic, fiscal and monetary reforms will help to revive the nation's economy and achieve fiscal deficit reduction goals. The rating agency lowered its rating to A1 from Aa3, with the outlook remaining at stable.
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