JP: PMI Manufacturing Index

Wed Sep 30 20:35:00 CDT 2015

Actual Previous
Manufacturing - Level 51.0 51.7

Production growth eased further in September to the weakest rate in the current five-month sequence of expansion. New exports orders fell at the fastest rate in over two-and-a-half years with a number of panelists suggesting lower trade volumes with China was the main contributing factor behind the decline in exports. Consequently, both employment and buying activity decreased.

The September Nikkei PMI reading was 51.0, down from 51.7 in August (the highest reading since January), indicating a slower rate of expansion in the manufacturing sector. However, total new orders increased at a rate similar to August's seven-month high. On the price front, input costs rose, albeit at only a marginal rate, while output charges decreased.

Latest survey data pointed to a slowdown in production growth at manufacturers. The rate of increase was slight and weaker than the long-run series average. Where output rose, panelists mentioned an increase in sales, while others noted that challenging economic conditions in China had helped to dampen overall production growth. Meanwhile, the data suggested that the main driver behind the latest expansion in new orders was the domestic market, as international demand declined.

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.