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Japan PMI June 2018

Japan: Manufacturing PMI rises slightly in June

The Nikkei flash manufacturing Purchasing Managers’ Index (PMI) increased from 52.8 in May (previously reported: 52.5) to 53.1 in June. As a result, the index remained comfortably above the 50-point threshold that separates expansion from contraction in the manufacturing sector.

June’s improvement was primarily driven by a faster expansion in output, which also boosted employment growth. Moreover, stocks of purchases jumped to positive territory in June. On the flip side, despite weaker new orders growth, supplier delivery times lengthened in June, suggesting supply-side constraints could be weighing on output potential. New export orders declined for the first time in nearly two years in June as rising geopolitical risks are strengthening the yen, putting downward pressure on manufacturing exporters.

Joe Hayes, Economist at IHS Markit, adds that:

“The final PMI reading of the second quarter revealed a quickened pace of growth across the Japanese manufacturing economy. The sector has sustained a relatively solid upward trend across 2018. June data indicated continued growth in new orders, a faster rate of job creation, rising backlogs of work and increasing output prices. As such, there appears to be further legs in the manufacturing growth cycle.”

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