Japan: Manufacturing PMI falls to three-month low in June amid rising global trade tensions
June 21, 2019
The Nikkei flash manufacturing Purchasing Managers’ Index (PMI) fell from May’s 49.8 (previously reported: 49.6) to 49.5 in June, which represented a three-month low. Therefore, the index remains below the 50-point threshold that separates expansion from contraction in the manufacturing sector.
June’s print reflected that all-important output and new orders declined at a faster rate compared to May’s print, reflecting weaker demand from both global and domestic markets. Against this backdrop, suppliers’ delivery times continued to lengthen, while stocks of purchases declined further in June. On the upside, job creation increased at a faster pace.
Joe Hayes, economist at IHS Markit, which compiles the survey, noted that:
“A soft patch for automotive demand and subdued client confidence in the wake of US-China trade frictions were often cited by survey respondents. Disappointing sales volumes also led to the largest accumulation of finished goods inventories for over six and-a-half years. At the same time, backlogs of work were depleted to the greatest extent since January 2013, which will likely act as an additional drag on production volumes in the months ahead.”
Japan Industrial Production Forecast
FocusEconomics Consensus Forecast panelists see industrial production rising 0.7% in 2019, which is down 0.4 percentage points over the previous month’s projection. For 2020 the panel expects industrial production to expand 1.0%.