TOKYO (Reuters – Japan’s manufacturing activity grew in October compared to the previous month. The services sector saw its expansion for the first times in 21 years after the lifting of restrictions on coronavirus outbreaks at home.

The supply disruptions faced by manufacturers and the surging demand for raw materials led to the steepest increase in input prices since more than 13 year. This was in addition to the continuing impact of the global health crisis on the economy.

From a previous 51.5, the au Jibun Bank Flash Japan Manufacturing PMI (seasonally adjusted) rose to 53.0 in Oct from an initial 51.5.

Key components of the survey showed that output rose and new orders increased partly due to strong overseas demand.

According to Usamah Bhatti (economist at IHS Markit), private sector companies noticed an increase in total new business, for the first time since April. This was aided by a faster rise in export orders.

“That being said, the firms continue to point out sustained supply chain pressures or material shortages.”

Au Jibun Bank Flash Services PMI Index climbed to 50.7, a seasonal adjustment from its previous month’s total of 47.8.

This meant that services sector activity was above the threshold of 50.0, which separates expansion from contraction for the first time since January 2020 before the deep COVID-19 recession.

Bhatti stated that “Panel members often associated the slight recovery with a decrease in COVID-19 patients and looser Pandemic Restrictions.”

Composite PMI au Jibun Bank Flash Japan Composite, which uses both manufacturing and service estimates, rose to 50.7 in September from 47.9 in September, its highest level since April.