Japan’s manufacturing accelerated in October from the previous month, while consumer prices rose in September for the first time in 18 months, data released on Friday showed.
The au Jibun Bank Flash Japan Manufacturing Purchasing Managers’ Index (PMI) rose to a seasonally adjusted 53.0 in October from a final 51.5 in the previous month. A reading above 50.0 indicates expansion.
Output and new orders expanded due in part to stronger overseas demand, the survey showed. “[The ] private sector … noted an increase in aggregate new business for the first time since April, assisted by a quicker rise in export orders,” Usamah Bhatti, an economist at IHS Markit, which compiled the survey, said.
However, Japan’s economy remains fragile amid the ongoing coronavirus pandemic and as elections loom for newly installed prime minister Fumio Kishida.
Higher Fuel Prices
Meanwhile, Japan’s core consumer prices rose 0.1% in September, the first year-on-year gain in 18 months.
Analysts said the rise was due to higher fuel prices. “Looking ahead, we believe the core CPI is likely to show stronger gains through year-end with the pickup in energy prices driven by the ongoing rise in oil,” Kazuma Maeda, analyst at Barclays in Tokyo, said.
The au Jibun Bank Flash Services PMI rose to a seasonally adjusted 50.7 from the prior month’s final of 47.8. The au Jibun Bank Flash Japan Composite PMI, which measures both manufacturing and services, rose to 50.7 from September’s final of 47.9, its highest figure since April.
“Companies were optimistic that business activity would improve in the year ahead,” Bhatti said. “Optimism stemmed from hopes that the pandemic would end and provide a broad-based boost to demand.”
- George Russell