Does the Japan Manufacturing PMI Indicate a Stronger Economy?



Japan’s manufacturing PMI in April

The Japan Manufacturing PMI (Purchasing Managers’ Index) stood at 52.7 in April 2017 compared to 52.4 in March. It was slightly below the preliminary market estimate of 52.8.

From March through August of 2016, the Japan Manufacturing PMI showed a huge contraction. A level above 50 indicates an expansion in manufacturing activity, while a level below 50 indicates a contraction in manufacturing activity.

The positive April manufacturing PMI was mainly due to a strong improvement in production output. New orders and export orders rose at a stronger pace, and overall domestic demand and overseas (VTI) (VEU) (ACWI) demand showed improvement.

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There was a modest economic recovery, with GDP rising in 2016. Japan’s (EWJ) (DXJ) consumer spending is also improving gradually. Consumer spending is one of the important components of GDP. Capital expenditure is also expected to rise, which could be reflected in stronger corporate earnings. That could improve the business climate.

In the next part of this series, we’ll take a look at the United Kingdom (EWU) Manufacturing PMI for April 2017.


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