Japanese manufacturing starts the year in positive tone

Japanese manufacturing sector probably started the year on a positive note according to purchasing managers' report from Nikkei/Market economics.

While the growth has been less than expected, it is important to note that, headline manufacturing PMI has remained in expansionary territory for fifth straight month. Headline number came at 52.4 for January, lower than 52.6 in December and 52.8 median expectations.

Details of the report shows, output, employment and new orders rose but at slower pace, whereas new export orders and quantity of purchases rose and at faster pace. Inflation outlook remain subdued as output and input prices, both decreased.

According to Amy Brownbill, economist at Markit,

"The start of 2016 was largely positive for the Japanese manufacturing sector, with latest data pointing to a solid improvement in operating conditions. Production rose at a rate little-changed from December's joint 21-month record. In contrast, new order growth eased to a six month low. Data suggested that the slowdown in total new order growth was mainly attributed to the domestic market, as international demand rose at a faster rate. Meanwhile, input prices fell for the first time in over three years linked to the declines in raw material costs, particularly oil- and metal-related items."

Japanese benchmark stock index, after being hammered from start of the year is up 5.9% today, as European Central Bank (ECB) hinted possibility of more stimulus. Yen on the other hand is backtracking gains, trading at 118.3.