Japan October factory activity rebounds, export orders return to growth: PMI

FAN Editor
A man fishes near a factory at the Keihin industrial zone in Kawasaki, Japan
A man fishes near a factory at the Keihin industrial zone in Kawasaki, Japan, November 15, 2017. REUTERS/Toru Hanai

November 1, 2018

TOKYO (Reuters) – Japanese manufacturing activity expanded at the fastest rate in four months in October as new export orders returned to growth, a business survey showed on Thursday, in a sign the economy is showing some resilience to global trade frictions.

The final Markit/Nikkei Japan Manufacturing Purchasing Managers’ Index (PMI) was a seasonally adjusted 52.9 in October, less than the flash reading of 53.1 but above a final 52.5 in September.

The index remained above the 50 threshold that separates contraction from expansion for the 26th consecutive month and reached the highest level since June.

“With PMI data for Q3 pointing to a slowdown in Japanese manufacturing sector growth momentum, a renewed acceleration at the beginning of the fourth quarter is welcome news,” said Joe Hayes, economist at IHS Markit, which compiles the survey.

“A rebound in export sales is also a positive development given the backdrop of global trade woes.”

The final index for new export orders was 51.1, less than a preliminary 51.7 but above a final 49.8 in September, which suggested a contraction.

The United States and China have slapped tit-for-tat tariffs on each other’s goods in recent months and Washington has threatened even more covering all of its imports from Cina.

Japan is potentially at risk as it exports manufacturing equipment and electronic parts, which are used to make finished goods for the United States and other markets.

The survey also showed persistent inflation pressures with input and output prices rising at a sharper pace.

(Reporting by Stanley White; Editing by Kim Coghill)

((stanley.white@thomsonreuters.com; +81 3 6441 1984 twitter.com/stanleywhite1; Reuters Messaging: stanley.white.reuters.com@reuters.net))

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