Japan’s manufacturing PMI rises at the sharpest pace in nine months

Manufacturing conditions in Japan rose at the fastest pace in nine months during the period of October, helped by a surge in sales, which have risen for the first time since January this year. A reading above 50 indicates expansion, while below the mark represents contraction in manufacturing activity.

Japan's flash manufacturing Purchasing Managers’ Index (PMI) rose to 51.7 in October, compared to 50.4 in September, data released by IHS Markit showed Monday. Also, flash Japan Manufacturing Output Index jumped to 53.7 in October, from 50.8 in September, with production increasing at the fastest rate since December 2015.

 Published on a monthly basis approximately one week before final PMI data are released, this makes the PMI the earliest available indicator of manufacturing sector operating conditions in Japan. The estimate is typically based on approximately 85-90 percent of total PMI survey responses each month and is designed to provide an accurate indication of final PMI data, reports from HIS Markit confirmed.

Further, the data suggested that a strong expansion in foreign demand led to the rise in total new orders, as new exports rose at the fastest rate in nine months.

"Not surprisingly, goods producers were more confident to take on additional workers, with the rate of job hiring picking up to a two-and-a-half year high. Firms also benefitted from lower cost burdens, as input prices declined," said Amy Brownbill, Economist, HIS Markit.