Japan: Domestic Manufacturing Weakens

Markit Flash Japan Manufacturing PMI, February 2015

Econintersect:  Manufacturing for domestic markets weakened in February according to the Flash (preliminary)  Manufacturing PMI (Purchasing Managers’ Index) for Japan in February 2015. The report from Markit put the overall index reading at 51.5, down from 52.7 for the final value in January.The strongest area of the report was for new export orders which increased at a faster rate than previously, while new orders overall increased at a slower rate. Another weakening area was stocks of finished goods which increased; in January this had been decreasing.

The strength of demand for exports was not enough to overcome the weakening domestic demand and the result was a weakening in the employment number.

Amy Brownbill, Economist at Markit, which compiles the survey issued the following statement:

The latest data signalled an improvement in operating conditions in the Japanese manufacturing sector. Despite a growth slowdown in incoming new orders, manufacturing production growth was solid and unchanged from the previous month. Meanwhile, new orders from international markets increased at the fastest rate since October 2014 – driven by the weaker yen.  However, employment growth weakened for the second successive month in February despite reports of an improving economy.”

Here is the summary of the assessment from Reuters:

Japan’s economy emerged from recession in the fourth quarter of last year, but consumer spending and capital expenditure were slower than expected, showing that households and companies are still cautious about the outlook.

Growth is likely to continue this year due to gains in household spending and exports, economists say, but tepid gains in real wages and a slowdown in Europe and China pose risks to the economy.

The final Markit/JMMA PMI for February will be released on March 2.

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Author: Travis Esquivel

Travis Esquivel is an engineer, passionate soccer player and full-time dad. He enjoys writing about innovation and technology from time to time.

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