Japan’s Manufacturing PMI Grew, Decline in Export orders

The Japanese manufacturing activity rose in August at a slightly quicker pace compared to the previous month with new orders accelerated but a drop in exports perturb and affect the impact of trade protectionism.

The Markit/Nikkei of Japan Manufacturing Purchasing Managers’ Index (PMI) grew to 52.5 in August from 52.3 in July.  The 50 mark separates the index between contraction and expansion for the 24th consecutive month.

The data indicates a moderate improvement in the health sector due to the surge of new orders, according to the economist at IHS Markit, Joe Hayes.

Moreover, the data shows “upturn” in demand pushed by domestic demand amid the drop in exports in the previous month. Rising concern in trade conflict could trigger the weakening of business confidence.

The new orders increased to 52.4 from a final mark of 50.9 in July, which was the first increase in four months as new orders induced sales based on the survey.

Meanwhile, the index of export orders demonstrated contraction, following a drop of 49.7 from 50.0 in July due to weaker demand from China.

Output costs of Japanese manufacturers grew at the fastest pace since October 2008 amid increasing input costs as demonstrated by the survey. Yet, retailers will probably hesitate to increase consumer prices with trepidation to shoppers.

Japan’s factory output declined for July because of sluggish growth of cars and steel based on the reports last week.

Also, the steel output dropped because of tariffs implementation on steel imports from Japan and other trading partners.