JP: PMI Manufacturing Index Flash

Sun Apr 22 19:30:00 CDT 2018

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Level 53.3 53.2

The flash estimate for the Japan manufacturing PMI headline index in April is 53.3, up from the final estimate of 53.1 for March (revised from a flash estimate of 53.2). If confirmed by final data to be released early next month, this will indicate that activity in the Japanese manufacturing sector remains relatively strong after the index reached its highest level in January since early 2014.

The increase in the headline index in April reflects improvements in the survey's measures of output, new orders, and employment, which all indicate that growth accelerated in the month. Survey respondents also reported stronger confidence about the twelve month outlook for output. The main exception to this trend was a reported decline in new orders for the first time since August 2016, likely reflecting the impact of the appreciation in the Japanese yen seen in recent months. The survey also indicate that manufacturers's margins improved, with input costs reported have risen at a slower rate than in March but selling prices at a faster rate.

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.