JP: PMI Manufacturing Index Flash

Tue Jan 23 18:30:00 CST 2018

Actual Previous Revised
Level 54.4 54.2 54.0

The flash estimate for the Japan manufacturing PMI headline index in January is 54.4, up from the final estimate of 54.0 for December (revised from a flash estimate of 54.2). 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 since February 2014.

The increase in the headline index in January reflects an increase in the survey's measures of output to its strongest level in nearly four years, with respondents also reporting an acceleration in new orders and new export orders. The survey also indicates that jobs growth has picked up in January, consistent with respondents reporting improved confidence about the twelve month outlook. Price pressures also appear to have strengthened, with the survey's measure of input growth increasing to its highest level since 2008 and selling prices reported to have been raised more aggressively.

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.