JP: PMI Manufacturing Index Flash

Tue Aug 22 19:30:00 CDT 2017

Actual Previous Revised
Level 52.8 52.2 52.1

The flash estimate for the Japan manufacturing PMI headline index in August is 52.8, up from the final estimate of 52.1 for July (revised from a flash estimate of 52.2). If confirmed by final data to be released early next month, this will indicate that activity in the Japanese manufacturing sector has expanded for twelve consecutive months and at the fastest pace since May.

The increase in the headline index in August reflects advance in all major components of the survey. The survey's output index rose from 51.4 in July to a flash estimate of 53.1 in August, its highest level in three months, with survey respondents also reporting faster growth in new orders, new export orders and employment. The survey's measure of business optimism also remained positive but somewhat weaker than in July. Input costs were reported to have increased at a faster pace in August than in July but selling prices were reported to have risen at a slower pace.

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.