JP: PMI Composite


Thu Mar 02 18:30:00 CST 2017

Actual Previous
Composite - Level 52.2 52.3
Services - Level 51.3 51.9

Highlights
The Nikkei Composite Index for Japan fell to 52.2 in February from 52.3 in January. The Business Activity Index for Japan's services sector, also published today, fell to 51.3 from 51.9. This follows an increase in the headline index for the manufacturing PMI, published earlier this week, to 53.3 from 52.7.

The fall in the headline index for the services PMI reflected weaker, albeit still positive, growth in new orders. Similar to the manufacturing survey, the services survey showed respondents remain confident about prospects over the next twelve months.

Consistent with official labour market data showing strong conditions in January, both PMI surveys also indicate solid job growth in February, with service sector respondents reporting the fastest growth in payrolls in 45 months and manufacturers reporting the strongest increase in 34 months.

Like manufacturers, service sector respondents reported higher input costs in February, albeit at a slightly slower pace than in January. The services survey showed a small increase in selling prices in February, while the manufacturing survey suggested selling prices in that sector were broadly unchanged. Official CPI data released today showed a small increase in headline inflation but subdued underlying price pressures.

Definition
The Markit Japan Composite Purchasing Managers Index (PMI) is based on original survey data collected from a representative panel of companies based in the Japanese manufacturing and service sectors. The Composite PM is a weighted average of the Manufacturing Output Index and the Services Business Activity Index, and is based on original survey data collected from a representative panel of over 800 companies based in the Japanese manufacturing and service sectors. Survey responses reflect the change, if any, in the current month compared to the previous month based on data collected mid-month.

Description
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.