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Manufacturing Headline PMI hits 12-month high in Japan

Staff Writer | January 5, 2017
The Japanese manufacturing sector ended 2016 on a positive note. Overall operating conditions improved at the sharpest rate since December 2015, helped by stronger growth in both production and new orders.
Japanese manufacturing
Economy in Japan   Nikkei Japan Manufacturing PMI
As a result, goods producers were more confident towards taking on additional workers, with the rate of job creation picking up to a 32-month high. Buying activity also rose at the quickest rate in nearly one year.

However, cost inflationary pressures continued to build, with input prices increasing at the fastest rate since July 2015. The headline Nikkei Japan Manufacturing Purchasing Managers’ Index (PMI) is a composite single-figure indicator of manufacturing performance.

It is derived from indicators for new orders, output, employment, suppliers’ delivery times and stocks of purchases. Any figure greater than 50.0 indicates overall improvement of sector operating conditions.

The headline PMI posted 52.4 in December, up from 51.3 in November, signalling a sharper improvement in manufacturing conditions in Japan. In fact, the latest reading was the highest since December last year and contributed to the strongest quarterly average since Q4 2015.

The higher figure reflected increases in output, new orders and employment. Production at Japanese manufacturers rose for the fifth consecutive month. Moreover, the rate of expansion was the sharpest registered during 2016.

According to panellists, new product launches and greater new work inflows contributed to the rise in output. All three sub-sectors registered production growth, with intermediate goods producers noting the strongest increase.