22.04.201823:32:00UTC+00Japan Manufacturing Activity Accelerates but Export Orders Drop - Flash PMI

Japanese manufacturing activity grew at a quicker pace in April than March as output and domestic demand accelerated. However, a private survey also showed export orders dropped for the first time in over a year and a half as a gradual appreciation in the yen starts to erode Japan's export competitiveness.

The flash Markit/Nikkei Japan Manufacturing Purchasing Managers Index (PMI) increased to a seasonally adjusted 53.3 in April from a final 53.1 in the previous month.

The index remained above the 50 threshold that separates growth from contraction for the 20th consecutive month and increased for the first time in three months.

The yen has gained around four percent against the dollar since the start of the 2018, and some economists have expressed concern that Japan's exports could weaken if the yen rises further because this pushes up export prices.

Japan's economy has expanded for eight straight consecutive months through the end of 2017, the longest continuous growth since the 1980s bubble economy.

The survey also showed Japanese companies continued to face sharp rises in input costs, but were able to pass on some of the increases to their customers.

IHS Markit economist Joe Hayes noted that new export orders declined for the first time since August 2016 on the back of a stronger yen. However, “the rise in total new business inflows signals stronger domestic demand,” he said.