JP: PMI Manufacturing Index Flash

Sun Sep 24 19:30:00 CDT 2017

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Level 52.6 52.8

September flash manufacturing PMI reading was a four month high of 52.6 after August's 52.2. The flash manufacturing output climbed to 53.5 from 52.5 in August and also the strongest growth for four months. Export sales expanded at a faster rate while employment increased at a slower rate. Among the other components, output prices increased at a slower rate while input prices increased at a faster rate. Future expectations indicated stronger optimism going forward. Overall, the report should please the Bank of Japan even though the price indicators were mixed.

The Purchasing Managers' Manufacturing Index (PMI) is based on monthly questionnaire surveys of selected companies which provide an advance indication of what is really happening in the private sector economy by tracking changes in variables such as output, new orders, stock levels, employment and prices across the manufacturing sectors. The flash index, usually released about a week before the final, gives a preliminary reading of conditions for the current month.

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.