JP: PMI Manufacturing Index

Thu Nov 30 18:30:00 CST 2017

Actual Previous
Manufacturing - Level 53.6 52.8

The Nikkei Manufacturing PMI headline index advanced to 53.6 in November, slightly below the flash estimate of 53.8 but confirming a strong increase from 52.8 in October.This is the highest reading for this index since March 2014.

The increase in the headline index reflects advances in all of the major components of the survey. Respondents reported output grew in November at the fastest pace since February 2014, while both new orders and new export orders were reported to have grown at multi-month highs. The survey's measure of business optimism also picked up in November, while employment was reported to have increased at the fastest pace in six months.

Today's survey also shows stronger price pressures in Japan, broadly constant with the recent upward trend in underlying CPI inflation. Respondents reported that input prices grew in November at their fastest pace in nearly three years, and firms also appear to have had some success passing these higher costs onto consumers, with the survey's measure of growth in selling prices picking up for a third consecutive month.

The improvement in manufacturing conditions indicated by the PMI survey is consistent with official forecasts for industrial production growth in November, published earlier in the week. Industrial production rose 0.5 percent on the month in October, and officials expect this will be followed by an increase of 2.8 percent on the month in November and then another 3.5 percent in December.

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.