Japan PMI December 2018


Japan: Manufacturing PMI improves in December

December 14, 2018

The Nikkei flash manufacturing Purchasing Managers’ Index (PMI) rose from November’s over-one-year low of 52.2 to 52.4 in December. As a result, the index remained above the 50-point threshold that separates expansion from contraction in the manufacturing sector.

The December reading showed an acceleration in output, which expanded at the fastest pace since April. Although new orders gained steam in December due to a solid domestic market, export orders declined at the fastest rate in over two years. Nevertheless, employment growth decelerated in the month. As a result of slower increases in input prices, firms were able to tame output charges

Joe Hayes, economist at IHS Markit, which compiles the survey, noted that:

“Preliminary PMI data shows that Japan’s manufacturing sector closed 2018 with a strong finish. […] There appears to be no lagged impact on output from the strong contraction in capex spending during Q3. The case for a year-end rebound in GDP looks strong based on PMI data thus far in Q4. Survey data does bring some cautious undertones to the fore, however. Export orders declined at the fastest pace in over two years, while total demand picked up only modestly. Confidence also continued to fall, a seventh straight month in which this has now occurred. The prospects heading into 2019 ahead of the sales tax hike still appear skewed to the downside.”

Japan Industrial Production Forecast

FocusEconomics Consensus Forecast panelists see industrial production rising 2.0% in 2019, which is down 0.3 percentage points from last month’s projection. For 2020 the panel expects industrial production to expand 1.3%.


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Japan PMI Chart

Japan PMI November 2018 2

Note: Nikkei Manufacturing Purchasing Managers’ Index. Readings above 50 indicate an expansion in the manufacturing sector while readings below 50 indicate a contraction.
Source: IHS Markit and Nikkei.

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