Japan final January manufacturing PMI shows fastest expansion in almost three years

© Reuters. A factory area is seen in front of Mount Fuji in Yokohama© Reuters. A factory area is seen in front of Mount Fuji in Yokohama

TOKYO (Reuters) – Japanese manufacturing activity expanded in January at the fastest pace in almost three years as export orders surged, a private survey on Wednesday, suggesting that overseas demand has rebounded strongly.

However, some economists may temper their optimism due to concerns that growing U.S. trade protectionism could threaten Japan’s export-focused economy.

The final Markit/Nikkei Japan Final Manufacturing Purchasing Managers Index (PMI) was a seasonally adjusted 52.7, slightly below a flash reading of 52.8 but still above the final reading of 52.4 in December.

The index remained above the 50 threshold that separates expansion from contraction for the fifth consecutive month, and showed that activity expanded at the fastest since March 2014.

The index for new export orders was 53.1, just below a preliminary 53.2 but still indicating the fastest gain in 12 months.

The index for total new orders, which measures both domestic and external demand, was 54.0, versus a flash reading of 54.1 and a final 53.2 in December. The data confirmed that new orders grew at the fastest in 13 months.

Recent data have suggested that Japan’s sluggish economy may be slowly regaining traction.

In a quarterly review of its forecasts, the Bank of Japan on Tuesday raised its growth estimates for the fiscal year beginning in April and the following year, nodding to brightening prospects for exports.

But the central bank left unchanged its already optimistic inflation forecasts for the coming years, despite external factors that push up prices, such as a rebound in oil prices and rising import bills from a weak yen.

“Risks to both economic activity and prices are skewed to the downside,” it said.

The PMI survey showed input prices accelerated to a 22-month high due to higher costs of raw materials stemming from weakness in the yen and higher fuel costs. But Japanese firms were only able to pass on only modest increases in the prices of their goods.

Some economists have expressed concern about Japan’s economic outlook because its exports could suffer if U.S. President Donald Trump adopts protectionist trade policies.

Japan is hammering out plans to show U.S. President Donald Trump its firms are ready to create U.S. jobs, according to a document whose contents were revealed to Reuters, as Prime Minister Shinzo Abe prepares for a summit where automotive trade will be high on the agenda.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

The article Japan final January manufacturing PMI shows fastest expansion in almost three years was originally published at Investing.com - All news.