Key Insight into Japan’s Manufacturing PMI in October

Japan’s manufacturing PMI (purchasing managers’ index) stood at 52.8 in October 2017, compared with 52.90 in September 2017, and beat the preliminary market estimation of 52.5.

The strong improvement in Japan’s manufacturing PMI in October 2017 was mainly due to the following:

• production volumes and output improving at a slower rate in October
• new orders and export orders expanding, with most orders coming from Asian countries and purchasing activity improving for the month
• rising employment in the manufacturing sector, with input cost inflation also picking up in October

Major Asian economies such as India (INDA), China (FXI) (YINN), Indonesia, and Malaysia all showed strong improvements in demand, and this drove Japan’s (EWJ) (DXJ) exports in October. However, rising geopolitical issues in past months have affected Japan’s economic activity.

In 2016, Japan’s economic growth stood at 1%, while US economic growth was at 1.6%. Japan’s annual economic growth stood at 0.6% in 2Q17, compared with 0.3% in 1Q17. The improvements in economic growth are a positive sign for Japan’s equity market.

In the next part, we’ll assess the performance of the UK’s manufacturing PMI for October 2017.