JP: PMI Manufacturing Index

Sun Aug 02 20:35:00 CDT 2015

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Manufacturing - Level 51.2 50.1

The manufacturing PMI reading was 51.2, up from 50.1 in June and signaled an improvement in operating conditions. Although marginal, growth was the quickest since February and stronger than the historical average. The latest reading reflected expansions in production, new orders, employment and stocks of purchases. Indicative of an overall improvement in the manufacturing sector was a further increase in production. Output growth accelerated to a five-month high, with both consumer and investment goods producers recording expansions in production. According to anecdotal evidence, the securing of new clients and stronger demand conditions led to the latest increase.

New orders from aboard at Japanese goods producers increased in July. Despite easing from June's 18-month record, the rate of expansion was in line with the average over the current 13-month sequence of growth. New product launches and success in gaining new international clients were cited as drivers behind greater foreign demand.

The Markit/JMMA Japan Manufacturing PMI is a composite index based on five of the individual indexes: New Orders, Output, Employment, Suppliers' Delivery Times and Stock of Items Purchased. The Delivery Times Index is inverted so that it moves in a comparable direction.

Investors need to keep their fingers on the pulse of the economy because it dictates how various types of investments will perform. By tracking economic data such as the purchasing managers' manufacturing indexes, investors will know what the economic backdrop is for the various markets. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly and causing potential inflationary pressures.