JP: PMI Manufacturing Index Flash

Wed Mar 21 19:30:00 CDT 2018

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Level 53.2 54.0

The flash estimate for the Japan manufacturing PMI headline index in March is 53.2, down from the final estimate of 54.1 for February (revised from a flash estimate of 54.0). If confirmed by final data to be released early next month, this will indicate that activity in the Japanese manufacturing sector has moderated for a second consecutive month but remains relatively strong after the index reached its highest level in January since early 2014.

The fall in the headline index in March was broad-based, with the survey's measures of output, new orders, new export orders, and employment all indicating positive but slower growth. Survey respondents also reported a drop in confidence about the twelve month outlook for output. Price pressures, however, were reported to have picked up so far in March, with the survey's measures of input costs and selling prices both showing stronger growth.

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.