Japan’s Manufacturing PMI Swings Negative Again

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Japanese manufacturing activity swung back into contraction in May, a private survey confirmed on Monday, as exports from the world’s third-largest economy continued their slump amid global trade tensions. 

The latest Nikkei-Markit PMI manufacturing purchasing managers’ index slipped to 49.8 during the month, compared to 50.2 in April. Any figure below 50 indicates that Japan’s manufacturing sector is shrinking. 

The survey noted that manufacturing output in Japan fell for the fifth successive month on the back of slowing domestic and overseas demand, while new export orders fell for the sixth month in a row.  “Weak demand from Japan’s key trade partner, China, as well as signs of an increasingly sluggish domestic economy, have impacted sales volumes,” said Joe Hayes, economist at IHS Markit.

Japanese businesses overall have turned pessimistic on their prospects for the next 12 months for the first time in six-and-a-half years amid heightened trade tensions and the prospect of a sales tax hike later in the year. 

“Re-escalated trade tensions between China and the United States merely add to existing concerns for manufacturers,” Mr Hayes added. May’s PMI reading was a notch higher than the 49.6 earlier predicted for May in the Nikkei-Markit flash manufacturing PMI, released on May 23, which provides an earlier glimpse of manufacturing activity in the country.


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