Japan: Manufacturing activity continues to accelerate - Nomura

Research Team at Nomura notes that Japan’s manufacturing PMI for February was 53.5, up 0.8pt from January.

Key Quotes

“The PMI reading has now risen three straight months and stayed above the 50 watershed between expansion and contraction for six straight months, a clear indication that manufacturing activity is expanding.”

“Looking at the five component indices, the manufacturing PMI was boosted by positive trends in the output index (up from 53.2 in January to 54.3 in February), the new orders index (up from 54.0 to 54.7), the supplier delivery times index (down from 48.8 to 48.4; a drop in this index pushes up the headline index), and the employment index (up from 52.8 to 54.2). The stock of items purchased index (down from 49.8 to 49.6) exerted downward pressure on the February PMI reading, but this is not entirely negative as inventory workdowns often occur in the initial stage of an expansion in production and consumption.”

“Continued rise of new export orders index suggests expansion of external demand

Recent industrial production data also indicate that production activity in Japan is steadily rebounding and that companies expect output to increase steadily going forward. We think rebounding external demand is the main factor supporting this pickup in production at Japanese manufacturers.”