JP: PMI Manufacturing Index Flash

Mon Oct 23 19:30:00 CDT 2017

Actual Previous Revised
Level 52.5 52.6 52.9

The flash estimate for the Japan manufacturing PMI headline index in October is 52.5, down from the final estimate of 52.9 for September (revised from a flash estimate of 52.6). If confirmed by final data to be released early next month, this will indicate that activity in the Japanese manufacturing sector is solid but continues to exhibit some volatility from month to month.

The decline in the headline index in September reflects a drop in the survey's output index from 53.2 in September to a flash estimate of 52.6 in September. Survey respondents also reported weaker growth in new orders, new export orders, and their optimism about the twelve month outdo for activity. The survey's measure of employment, however, increased in September. Input costs were reported to have increased at the same rate in October as in September while selling prices were reported to have risen at a slightly faster (though still "marginal") 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.