JP: PMI Manufacturing Index

Sun Nov 01 19:35:00 CST 2015

Actual Previous
Manufacturing - Level 52.4 51.0

Operating conditions at Japanese manufacturers improved substantially in October. Growth in production accelerated to the fastest since February, underpinned by a sharp rise in total new orders. Supporting the marked increase in new work was a rise in international demand as new export order growth resumed, having contracted slightly in the prior month. Subsequently both employment and buying activity increased, following declines seen in September.

The Nikkei manufacturing PMI climbed to 52.4, up from 51.0 in September, indicating a marked improvement in operating conditions at Japanese manufacturers. The latest reading was the highest recorded since October 2014, which reflected faster rates of expansion in production and new orders and a return to growth in both employment and stock building. The current exchange rate weighed on manufacturers as purchasing prices increased further, while charges declined for the second straight month.

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.