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Japan PMI October 2018

Japan: Manufacturing PMI rises to a six-month high in October

The Nikkei flash manufacturing Purchasing Managers’ Index (PMI) came in at 53.1 in October, up from September’s 52.5. As a result, the index remained comfortably above the 50-point threshold that separates expansion from contraction in the manufacturing sector and marked the highest reading in six months.

October’s print mostly reflected faster growth in output and new orders. As a result of stronger demand, employment also expanded at a faster pace in October compared to September. However, suppliers’ delivery times continued to lengthen, while stocks of purchases increased at a slower rate. Despite rising global trade tensions, new export orders returned to growth in October for the first time since May. Higher global commodity prices, especially for energy, continued to push up input prices, which translated into increased output charges. Looking forward, despite remaining in positive territory, business confidence signaled to weaker optimism regarding Japan’s manufacturing outlook.

Joe Hayes, economist at IHS Markit, which compiles the survey, added that, ““following a rather disappointing slew of PMI data over the third quarter, Japan’s manufacturing sector looks set to start Q4 on a more upbeat note. […] That said, next month’s data will be important to assess whether the latest growth rebound is a transitory response to weakness resulting from recent natural disasters.”

Japan Industrial Production Forecast

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