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Japan PMI Shows Expansion in Q3

Japan’s manufacturing activity picked up in the third quarter, a survey showed, but economists say they need more information on wages and consumer spending to determine whether the government should raise the sales tax again next year.

An improving corporate sector is certainly welcome news for Japanese Prime Minister Shinzo Abe after the economy contracted sharply in the second quarter following the first of two increases in the sales tax.

But the government, which is monitoring third-quarter economic data to decide whether to raise the sales tax again, is likely to remain cautious for fear that consumer spending may not fully recover. Abe is to make a final decision by the end of the year.

“Conditions for Japan’s manufacturers are improving, and this is in line with an improvement overseas,” said Hiroshi Miyazaki, senior economist at Mitsubishi UFJ Morgan Stanley Securities.

“However, Abe’s policies rely more on households and the services sector.”

The Markit/JMMA flash Japan Manufacturing Purchasing Managers Index (PMI) fell to a seasonally adjusted 51.7 in September from a final reading of 52.2 in August, but remained above the 50 threshold that separates expansion from contraction for a fourth straight month.

From July to September, the manufacturing PMI averaged 51.5, which is higher than the April-June average of 50.3 and shows that manufacturing is recovering, Miyazaki said.

via Reuters [1]

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Alfonso Esparza

Alfonso Esparza [6]

Senior Currency Analyst at Market Pulse [7]
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza
Alfonso Esparza

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