Japan Nikkei PMI slumps in May for third month on weak overseas demand

Japan May final Nikkei purchasing managers’ index slumped for the third consecutive month in a row on weak demand from overseas consumers amid devastating earthquakes that shook the Japanese economic and manufacturing centre in April, which weighed heavily on market sentiments.

The Nikkei final manufacturing purchasing managers’ index (PMI) came in at 47.7, slightly above last week’s flash estimate of 47.6. The manufacturing PMI gauge had weakened to 48.2 in April, where a reading below 50 is considered as a contraction in the economy.

Further, a strong yen through 2016 has remained responsible for the recent weakness in Japan’s manufacturing sector. Yen appreciated more than 10 percent against the USD this year, confounding the Bank of Japan’s massive stroke to re-inflate the drowning economy.

Japanese stocks remained on the downside post the data release, emanating concerns of a contraction in the economy to continue in the near term.  Also, gains in yen in early trades today was due to a shift in consumer interest following Britain’s upcoming referendum on European Union membership.

Meanwhile, at 6:17 GMT, Japan’s Nikkei 225 fell 1.83 percent to 16,921.53, while JPY rose 0.63 percent to 110 against the greenback. Moreover, TOPIX remained 1.38 percent in red at 1,360.72 on the Tokyo Stock Exchange.