Japan: Manufacturing PMI rises in August
August 23, 2018
The Nikkei flash manufacturing Purchasing Managers’ Index (PMI) increased slightly from 52.3 in July to 52.5 in August. As a result, the index remained comfortably above the 50-point threshold that separates expansion from contraction in the manufacturing sector.
August’s improvement was primarily driven by a faster expansion new orders, which boosted output growth and led manufacturers to increase input purchases. Moreover, supplier delivery times lengthened in August, albeit a slower rate. Despite August’s increase in manufacturing activity, businesses hired additional staff at a slower pace. New export orders declined in August due to rising global economic uncertainties and suggesting that August’s overall improvement was entirely led by the domestic market. Higher global commodity prices, especially for energy, continued to fuel input prices.
Joe Hayes, Economist at IHS Markit, added that:
“August flash data extended the current growth cycle in Japan’s manufacturing sector to two years, the longest uninterrupted stretch of expansion since the global financial crisis. […] weaker international sales weighed on business confidence, with panellists citing potential trade conflicts as a key risk to their outlook over the coming year. Positive sentiment eased to the lowest level since November 2016.”
Japan Industrial Production Forecast
FocusEconomics Consensus Forecast panelists see industrial production rising 2.0% in 2018, which is unchanged from last month’s projection. For 2019 the panel expects industrial production to expand 2.4%.