Japan manufacturing PMI contracts for the first time in almost a year

The Markit/Nikkei Flash Japan Manufacturing Purchasing Managers Index (PMI) fell to 49.1 in March on a seasonally adjusted basis from a final 50.1 in February. Japan's manufacturing activity fell into contraction in March for the first time in almost a year as stronger yen and weak global growth is hurting Japanese corporates.

The decline was driven by the new orders index, which fell to a preliminary 45.9 from 49.0 in February. This again was due to a fall in the export orders component, which plunged 3.1p to 45.9, the lowest reading for the new export orders since 2013. Output down 0.8p to 49.8.

A slowdown in China and other emerging markets will continue to weigh on demand for Japanese machinery and electronics and will likely keep Japan's exports weak for some time. Data adds to BoJ concerns which stunned global markets in Jan by adding negative interest rates to its massive asset-buying program as it struggles to reflate the long-moribund economy.

Japan's economy shrank in the final quarter of 2015 and concern about global demand has led some to predict another contraction that will push Japan back into a technical recession (defined as two straight quarters of economic contraction).