JP: PMI Manufacturing Index

April 30, 2017 07:30 CDT

Actual Previous
Manufacturing - Level 52.7 52.4

The Nikkei Manufacturing PMI headline index advanced to 52.7 in April, close to the flash estimate of 52.8, and confirming an increase in the index from 52.4 in March. The index is still below the recent high recorded in February but continues to indicate a solid expansion in Japan's manufacturing sector.

The survey's production index shows output by manufacturers increased for the eighth consecutive month in April, with the pace of growth picking up from March. Respondents reported another increase in new orders, though slightly down from the pace set in March, and a stronger increase in new export orders. Respondents are also more confident about the twelve month outlook for activity, with the survey's measure of employment also remain gin close too the near three-year peak recorded in February.

Respondents also report that input price increases accelerated in April to their fastest pace in more than two years, with higher fuel and steel prices making a significant contribution. Firms reported they were able to pass on these higher costs to their customers, with the survey showing selling prices increasing by the most since late 2014.

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.

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.