Japan: Manufacturing sector stabilizes at low levels in March
March 22, 2019
The Nikkei flash manufacturing Purchasing Managers’ Index (PMI) was unchanged at February’s 48.9% (previously reported: 48.5) in March, the lowest level since July 2016. As a result, the index sits below the 50-point threshold that separates expansion from contraction in the manufacturing sector.
March’s reading reflected that all-important output and new orders declined at a faster rate compared to the previous month. Employment growth, however, accelerated in the same month. Stocks of purchases increased in March following a decline in February, while suppliers’ delivery times continued to lengthen. New export orders continued to fall in March, reflecting an uncertain global economic outlook.
Joe Hayes, economist at IHS Markit, which compiles the survey, noted that:
“Further struggles for Japanese manufacturers were apparent at the end of Q1, with latest flash PMI data showing a sustained downturn. Slack demand from domestic and international markets prompted the sharpest cutback in output volumes for almost three years. With input purchasing falling, firms appear to be anticipating further troubles in the short-term. Indeed, concern of weaker growth in China and prolonged global trade frictions kept business confidence well below its historical average in March.”
Japan Industrial Production Forecast
FocusEconomics Consensus Forecast panelists see industrial production rising 1.1% in 2019, which is unchanged from last month’s projection. For 2020 the panel expects industrial production to expand 0.9%.