Latest survey data pointed to an improvement in operating conditions in the Japanese manufacturing sector. Growth in production picked up to an eight month
high, supported by a marked increase in total new orders. Meanwhile, growth in new export orders resumed after decreasing slightly in the prior month. Subsequently, both employment and buying activity expanded, having both recorded declines in September. On the price front, the current exchange rate weighed on manufacturers as purchasing prices increased further, while charges declined for the second straight month.
The headline PMI posted at 52.4, up from 51.0 in September, indicating a marked improvement in operating conditions at Japanese manufacturers. The latest reading was the highest recorded since October 2014, which reflected faster rates of expansion in production and new orders and a return to growth in both employment and stock building.
Supporting the overall improvement in manufacturing conditions was a marked rise in production. The rate of increase was the fastest since February, with many panellists mentioning new product launches and strong demand. Output was matched by a marked increase in new orders, which rose at the fastest rate in a year.
According to panellists, advertising campaigns, the launching of new products and greater demand from both international and domestic clients all contributed to the expansion in incoming new work. Meanwhile, new orders from abroad rose in October following a slight contraction seen in the prior month. Moreover, the rate of expansion was the sharpest since July and one that was well above the long-run trend.
Resulting from expansions in both production and new orders, manufacturers hired additional staff in October. The rate of job creation was the most marked in one-and-a-half years. Similarly, buying activity rose during the month at a rate which was the quickest since October last year.
Finally, mild inflationary pressures were evident, as reports of higher raw material prices stemming from the depreciation of the yen against the dollar increased input prices. On the other hand, charges declined as clients placed pressure on manufacturers to reduce their selling prices.