How a Softening Japan Services PMI Is Impacting the Economy
Japan Services PMI in April
According to Markit Economics, the Japan Manufacturing PMI (Purchasing Managers’ Index) was 52.2 in April 2017 compared to 52.9 in March. It met market expectations.
Less improvement in the services PMI in April indicates that production output, new orders, and export orders rose at a slower pace.
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April was the seventh consecutive month of expansion. A level above 50 is considered expansion in activity, while a level below 50 is considered contraction. The Japan (EWJ) (DXJ) Manufacturing PMI, however, showed slower improvement in the business sector. Manufacturing activity has been expanding for the past six months.
In the last six months, overall domestic demand and overseas (VT) (ACWI) (VTI) demand in the services sector have improved. That’s extremely important for the Japanese economy, which has been suffering from slower economic growth.
Capital expenditures for Japanese businesses are expected to rise, which could result in higher corporate earnings. That, in turn, could improve the business climate.
Services is a major component of Japan’s GDP. The contribution of the services sector to GDP is improving gradually. Better numbers for the services PMI shows that the major service industries are positive about the outlook for the country.
In the next part of this series, we’ll take a look at the performance of the Eurozone Sentix Investor Confidence in May 2017.