Japan PMI January 2018


Japan: Manufacturing PMI rises to four-year high in January

January 24, 2018

The Nikkei flash manufacturing Purchasing Managers’ Index (PMI) climbed from 54.0 in December to 54.4 in January, the strongest reading since February 2014. The index thus remains firmly entrenched above the 50-point threshold that separates expansion from contraction in the manufacturing sector.

January’s surge largely resulted from an acceleration of output and employment growth, partly compensated for by a decrease in the pace of growth of both domestic and export orders. Stocks of purchased materials also increased, whereas suppliers became slower to execute delivery of orders.

Meanwhile, on the price front, both input and output inflation accelerated. Overall, manufacturers became more optimistic regarding the outlook in January. According to Joe Hayes, Economist at IHS Markit, “The [manufacturing] sector has observed accelerated rates of improvement in each of the past three months. […] Strikingly, output price inflation accelerated to the fastest rate since October 2008 amid sharper rises to input costs. With a low rate of unemployment and sustained growth in official GDP data, inflationary pressures should continue to mount.”

FocusEconomics Consensus Forecast panelists see industrial production rising 2.6% in 2018, which is down 0.1 percentage points from last month’s projection. For 2019 the panel expects industrial production to expand 2.1%.

Author:, Economist

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Japan PMI Chart

Japan PMI January 2018

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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