Mount Fuji, Japan

Japan PMI November 2019

Japan: Composite PMI recovers in November from October’s sales tax hike

The Jibun Bank composite Purchasing Managers’ Index (PMI) rose from October’s 49.1 to 49.9 in November. The index, however, remained below the 50 threshold that separates expansion from contraction in the private sector.

The increase in the composite index mostly reflected a recovery in the service sector following a sales tax increase in October and a devastating typhoon. Despite rising, the increase in the manufacturing index was more moderate, reflecting weak global demand and the China-U.S. trade war. Looking forward, Joe Hayes, an economist at IHS Markit, comments that:

“Slack in export demand, the protracted U.S.-China trade war and limited policy levers stack up against the chances of an improvement in Japan’s economy. Without any drive from the service sector, a quarterly contraction in Q4 seems highly likely.”

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