JP: PMI Manufacturing Index Flash

Wed Dec 13 18:30:00 CST 2017

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Level 54.2 53.8

The flash estimate for the Japan manufacturing PMI headline index in December is 54.2, up from the final estimate of 53.6 for November (revised from a flash estimate of 53.8). If confirmed by final data to be released early next month, this will indicate that activity in the Japanese manufacturing sector is growing at the fastest pace in nearly four years.

The stronger headline index in December reflects an increase in the survey's measures of new orders and new export orders, with recent depreciation in the domestic currency again cited as a factor boosting external demand. Respondents also reported output and employment grew so far this month but at a slower pace than in November, while optimism about the twelve month outlook has also weakened. The survey suggests that margins have improved, with input costs reported to be growing at a slower rate but selling prices reported to have risen the fastest pace in over three years.

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.