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Japan: Trade remains healthy in March, manufacturing PMI ticks up in April

Staff Writer | April 24, 2017
Nominal exports valued in yen increased 12.0% from the same month last year in March, following February’s 11.3% increase.
Japan trade
Asia   Imports expanded 15.8% annually in Japan
The print exceeded the 6.2% increase that market analysts had expected and represented the fastest acceleration in over two years.

The external sector is benefiting from a weak yen and stronger global demand.

Imports expanded 15.8% annually in March, which followed February’s 1.2% increase. The print beat the 10.0% rise that the markets had expected. Higher prices for raw materials are pushing up imports.

As a result of the strong rise in imports, the trade surplus declined from JPY 745 billion in March 2016 to JPY 615 billion in March 2017 ($5.6 billion).

In the 12 months up to March, the trade surplus inched down to JPY 4.0 trillion, which was lower than the JPY 4.1 trillion surplus recorded in the previous month.

The Nikkei Flash Manufacturing Purchasing Managers’ Index (PMI) rose from March’s revised 52.4 (previously reported: 52.6) to 52.8 in April.

As a result, the index remains comfortably above the 50-threshold that separates expansion from contraction in the manufacturing sector.

April’s result reflected that output expanded at a faster pace as well as employment. Although growth in new orders remained robust, it softened in the same month.

Higher commodity prices are adding pressure on overall prices, with input costs and output charges rising at faster rates.

Paul Smith, Senior Economist at IHS Markit highlights that, “April’s PMI data signalled continued healthy growth of Japan’s manufacturing sector, and the latest results were again consistent with production rising at a quarterly rate of around 2%.

“Driven by firmer external demand, the sector was underpinned by a stronger export performance in April, with new export orders rising at a rate amongst the best seen in the past three years.

“Companies are also adding to their workforces at a rate that matched January’s 34-month peak.”