Japan PMI January 2019


Japan: Manufacturing sector stalls in January

January 24, 2019

The Nikkei flash manufacturing Purchasing Managers’ Index (PMI) fell sharply from December’s revised 52.6 (previously reported: 52.4) to 50.0 in January, the lowest print since October 2016. As a result, the index now sits on the 50-point threshold that separates expansion from contraction in the manufacturing sector.

January’s reading reflected that all-important output and new orders fell into contractionary territory, while employment growth decelerated. Stocks of purchases decreased at a faster rate, while suppliers’ delivery times continued to lengthen. New export orders worsened in January, reflecting a somber global economic outlook. Moreover, price pressures remained subdued, suggesting that the country is far from overcoming Japan’s traditional “deflationary mindset”.

Joe Hayes, economist at IHS Markit, which compiles the survey, noted that:

“The underlying picture will raise concern given renewed reductions were seen in new orders and output. Further signs that the downturn in the global trade cycle could yet worsen were also signalled, with new export orders falling at the sharpest rate since July 2016. The widely-anticipated rebound in Q4 should not distract from the bigger picture. Domestic economic weakness compounded with slowing global growth coincided with the lowest level of business confidence for over six years.”

FocusEconomics Consensus Forecast panelists see industrial production rising 1.7% in 2019, which is unchanged from last month’s projection. For 2020 the panel expects industrial production to expand 0.8%.


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Japan PMI Chart

Japan PMI January 2019 2

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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