Japan manufacturing PMI rises to 54.4 in January, output expands at quickest rate in 47 months

Japan’s manufacturing activity expanded at the fastest pace in almost four years in January, a survey showed on Wednesday, with solid output and employment levels pointing to a bright outlook for an economy that continues to grow at a healthy clip.

The Flash Markit/Nikkei Japan Manufacturing Purchasing Managers Index (PMI) rose to a seasonally adjusted 54.4 in January from a final 54.0 in December. The index remained above the 50 threshold that separates contraction from expansion for the 17th consecutive month and reached the highest level since February 2014.

Further, the output component of the PMI index rose to a preliminary 54.7 from 54.5 in the previous month to also reach a peak not seen since February 2014. The employment reading was at its highest in two months, while the index for output prices rose to a preliminary 52.0 from 51.0 in December, the best level since October 2008.

"Strikingly, output price inflation accelerated to the fastest rate since October 2008 amid sharper rises to input costs. With a low rate of unemployment and sustained growth in official GDP data, inflationary pressures should continue to mount," said Joe Hayes, Economist at IHS Markit.

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