Japan Manufacturing Sector Expands at Record Pace

2016 is shaping up to be a yearbook ended by growth for Japanese manufacturers, after a sluggish global growth, a rising yen and two earthquakes caused the sector to sag for much of the spring and summer. The Nikkei Flash Japan Manufacturing Purchasing Managers' Index, or PMI, rose to 51.7 in October from September's 50.4, improving at the sharpest rate in nine months. The Flash Markit/Nikkei Japan Manufacturing Purchasing Managers Index (PMI) rose to a seasonally adjusted 51.7 in October from a final 50.4 in the previous month.

The index remained above the 50 threshold that separates expansion from contraction for the second month and showed that activity expanded at the fastest since January. The index for new orders rose to a preliminary 51.3 from 49.6 in the previous month, marking the first expansion in nine months. Manufacturing PMI in Japan averaged 49.62 from 2008 until 2016, reaching an all-time high of 56.20 in January of 2014 and a record low of 29.60 in February of 2009. Manufacturing PMI in Japan is reported by Markit.

The Manufacturing Purchasing Managers Index is based on five individual indexes with the following weights: New Orders (30 percent), Output (25 percent), Employment (20 percent), Suppliers’ Delivery Times (15 percent) and Stock of Items Purchased (10 percent), with the Delivery Times index inverted so that it moves in a comparable direction. A reading above 50 indicates an expansion of the manufacturing sector compared to the previous month; below 50 represents a contraction; while 50 indicates no change. This page provides the latest reported value for - Japan Manufacturing PMI - plus previous releases, historical high and low, short-term forecast and long-term prediction, economic calendar, survey consensus and news.

The flash index for new export orders rose to 53.1 from a final 51.1 in September, indicating the second consecutive month of growth. Government data on exports and household spending suggest Japan's economic growth was subdued in July-September, so the PMI survey could point to an acceleration in growth in October-December. Japan's economic growth has been lackluster for much of this year as consumer spending and exports largely undershot economists' expectations.

"Manufacturing conditions in Japan continued to improve in October. Production rose at the sharpest rate this year so far helped by a boost in sales, which have increased for the first time since January," said IHS Markit economist Amy Brownbill. "Not surprisingly, goods producers were more confident to take on additional workers, with the rate of job hiring picking up to a two-and-a-half year high," she added.

Earlier this month, the International Monetary Fund (IMF) upgraded its outlook on the Japanese economy for the next two years. Gross domestic product (GDP) is forecast to grow 0.5% this year and 0.6% in 2017. Previously, the IMF projected 2016 growth of 0.3% and said the expansion would slow to just 0.1% next year. The final PMI for October will be published on the 1^st of November.