Japan manufacturing growth comes lazy in February

Japan Shares

After having a four-year high performance in January, Japan’s manufacturing sector slightly pulled back this month.

The Nikkei-IHS Markit flash manufacturing Purchasing Managers Index (PMI) trimmed at 54.0 points in February, lower than last month’s score of 54.8. This growth is the slowest pace recorded since October 2017.

Despite of this edge in the recent performance, Japan’s manufacturing sector is still perceived to continually improve its level of activity. PMI suggests that any score above 50 indicates an upward movement while a reading lower than 50 shows a deteriorating performance.

Japan’s manufacturing output and new orders still rendered an increase, but at a slower rate.

As reported in PMI’s Flash Japan Manufacturing Summary, all activity subindices aside from inventories of finished products increased in February, notably the employment indicator which accelerated to an 11-year high.

The flash reading released primarily from the final PMI report, is based on 85-90 percent of PMI’s survey responses making it generally accurate in predicting the final figure.

“On the one hand, output and new business inflows increased to weaker extents, while recent yen appreciation has coincided with slower new export order growth,” Markit IHS economist Joe Hayes stated.

He also noted that a number of market panellists indicated how Japan’s stronger currency affected price decrease to customers abroad. Further yen strengthening is also seen to create an unwanted delay on inflationary pressures.

“Export growth slowed from January’s peak but remained solid,” IHS Markit principle economist Bernard Aw said.


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