Japan's industrial production, manufacturing PMI
(purchasing managers' index) and consumer prices have risen while jobless
numbers have fallen, according to data issued Friday.
Industrial output in Japan climbed by just 3.2%
in July, missing expectations for 3.6% growth, following a dip in June. In
related news, Japanese manufacturers recorded a solid improvement in business conditions in August, as output and new order growth accelerated. This suggested the slowdown recorded in July marked only a temporary lull, although a slight fall in new export orders in August cast a shadow on an otherwise strong performance of Japan’s manufacturing Industry.
Japan's consumer prices rose in July at the
highest rate in over four and a half years, while key jobs data improved to a
high of nearly five years, giving a boost to policy makers who are seeking to
end 15 years of deflation.
There was a 0.7% year-on-year rise in the core
Consumer Price Index, the second straight monthly gain while the July
unemployment rate dropped to 3.8% from 3.9% a month ago, and the
jobs-to-applicants ratio—a measure of how many jobs are available per job
seeker—rose to 0.94, the highest level since May 2008.
The Bank of Japan has a target of reaching 2%
price inflation growth in two years. However, the Bank of Japan has said it's
dependent on inflationary expectations rising that will trigger more consumer
Japan's Labour Market: Lifers, temps and banishment rooms
The headline seasonally adjusted Markit/JMMA purchasing managers’ index (PMI)
– a composite indicator designed to provide a single figure snapshot of the
performance of the manufacturing economy – rose from 50.7 in July to 52.2 in August, the second highest recorded in the current six-month run of growth.
Manufacturing output rose at the fastest rate recorded in 30 months in August, which also marked the sixth successive month of growth. Anecdotal evidence indicated this was largely a result of an expansion of domestic demand and the latest data supported this, with new orders increasing at a solid pace for the sixth consecutive month. In turn, the rise in new orders was cited by some manufacturers as a primary factor behind an increase in backlogs, which rose for the first time in 27 months.
Sector level data indicated the rise in new business was largely driven by investment goods manufacturers. Conversely intermediate goods producers recorded not only a more modest rise in new orders, but a marked decline in output.
New export orders fell marginally in August, the first time in six months that a decline has been registered. That was despite a number of respondents reporting that the weak yen had aided their export sales. The effect of the weak yen appeared to have been overshadowed by a net contraction in foreign demand, and a number of
panellists noted a decline in orders from China and South Korea.
Employment barely changed in August, recording a fractional rise. That said, the respective index posted above its historical series average and increased from July’s four-month low. Respondents commonly associated higher staffing levels with increased production resulting from higher order volumes.
Suppliers’ delivery times changed by a similarly negligible degree with a minor deterioration in vendor performance recorded in August. This was primarily attributed to a rise in orders by the small proportion of
manufacturers who recorded lengthening delivery times.
Input prices rose for the eighth consecutive month and at the fastest pace recorded since September 2011. Anecdotal evidence cited higher import costs, due to the current weakness of the yen, as a key factor. Meanwhile, other respondents attributed price rises to increased fuel costs.
Output prices posted no change in August. Evidence from respondents indicated upward pressures from higher energy costs and the weak yen were offset by price competition from Asia.
Claudia Tillbrooke, economist at Markit and author of the report said: “Manufacturing data for Japan was
reassuringly positive in August, indicating July’s slowdown was merely a temporary lull. The next few months will give measure of the stability of this growth trend; but August’s strong performance should comfort those who feared July marked the beginning of the end of Japan’s recent run of growth.
“Output rose at the fastest rate recorded for 30 months in August, and new orders grew at a similarly strong pace. This growth in production and new business is all the more remarkable given the relatively poor performance of exports recorded by our panellists. It seems that, despite the continued weakness of the yen, contractions in foreign demand are of greater consequence to exporters, and was the key driver behind August’s slight decline in overseas sales."
The Markit/JMMA Japan Manufacturing PMI is based on data compiled from
monthly replies to questionnaires sent to purchasing executives in over 400 industrial companies.
Check out our
, at a low annual charge of €25.