JP: PMI Manufacturing Index Flash

Thu Nov 23 18:30:00 CST 2017

Actual Previous Revised
Level 53.8 52.5 52.8

The flash estimate for the Japan manufacturing PMI headline index in November is 53.8, up from the final estimate of 52.8 for October (revised from a flash estimate of 52.5). If confirmed by final data to be released early next month, this will indicate that activity in the Japanese manufacturing sector has grown in November at the fastest pace since early 2014.

The stronger headline index in November reflects an increase in the survey's output index to a flash estimate of 54.2, a level not seen since March 2014. Survey respondents also reported stronger new orders and new export orders, with recent depreciation in the domestic currency cited as a factor supporting external demand. The survey's measure of employment also increased in November, though respondents are somewhat less optimistic about the twelve month outlook for activity. Both input costs and selling prices were reported to have increased at a faster pace in November than in October, with the weaker currency again reported to be putting upward pressure on costs.

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.