Japan: Manufacturing PMI declines from January’s multi-year high in February
The Nikkei flash manufacturing Purchasing Managers’ Index (PMI) declined from January’s four-year high of 54.8 to 54.0 in February. The index thus remains firmly entrenched above the 50-point threshold that separates expansion from contraction in the manufacturing sector.
February’s moderation resulted from weaker growth in output, new orders and stocks of purchases. These moderations were, partly compensated by an increase to an 11-year high in employment growth. Suppliers became slower to execute delivery of orders.
Meanwhile, on the price front, both input and output inflation decelerated. Overall, manufacturers became more optimistic regarding the outlook in January. Joe Hayes, Economist at IHS Markit added that, “February Japan flash PMI data is a fairly mixed bag overall. On the one hand, output and new business inflows increased to weaker extents, while recent yen appreciation has coincided with slower new export order growth. Furthermore, a number of panellists indicated that the stronger currency had prompted them to lower prices to overseas customers. Indeed, further yen strengthening will create unwanted drag on inflationary pressures.”