TOKYO, Reuters – Japan’s manufacturing activity grew at its fastest rate in almost four years in November. This was due to a moderated supply problem and an increase in output.

But, companies said that they still faced cost pressures as a result of delays in delivery and materials shortages, which caused the surge in input prices for the first time since 2013.

On a seasonally adjusted basis the final au Jibun Bank Japan Manufacturing Purchasing Managers’ Index rose to 54.5 in November, which marked its fastest rate of growth since January 2018.

This figure was also higher than the previous month’s 53.2 flash reading and 54.2 flash reading. It marked the 10th consecutive month of manufacturing activity expansion.

According to Usamah Bhatti (economist at IHS Markit), “The Japanese manufacturing industry continued to see an improvement of operating conditions midway through fourth quarter.”

Bhatti reported that many manufacturers experienced a significant and persistent decrease in lead times. There was evidence that this could be due to supply chain disruptions which continued to slow down activity in the sector.

Bhatti stated that “Material shortages as well as logistical disruptions” contributed to an increase in average costs. He also said that input prices rose at their fastest rate since August 2008.

Japan’s industrial output rose in October for the fourth time in four month, according to Tuesday data. The increase in car production was offset by declines of steel and chemicals manufacturing.

It is anticipated that the third-largest country in the world will recover in this quarter, after it contracted in July-September due to curbs to stop a rise of coronavirus infections. This has hurt corporate and household sentiment.