Latest survey data pointed to a further improvement in Japanese manufacturing business conditions in October. Production increased at the sharpest rate in ten months, supported by a return to new order growth. International demand also picked up, with new export orders increasing at the quickest rate since January. As a result, manufacturers took on additional workers at the strongest pace in two-and-a-half years. On the price front, both input prices and charges declined at weaker rates.
The headline PMI posted at 51.4 in October, up from 50.4 in September, signalling an improvement in operating conditions at Japanese manufacturers. In fact, the latest reading was the highest since January and greater than the long-run series average (50.6).
Contributing to the overall improvement in the manufacturing sector was an expansion in output. Moreover, the rate of increase was the quickest since December last year. According to panellists, stronger demand from both domestic and international clients led to the rise in production.
Total new orders rose for the first time since January during October. According to a number of surveyed respondents, the launching of new products and success in gaining new customers helped boost new orders. Data also suggested that an expansion in international demand also contributed to total sales growth. However, the rate of increase in total incoming new orders was only marginal overall.
New export orders rose at the quickest rate in nine months during October. Firms linked higher international demand to greater trade volumes with China, Taiwan, Europe and southeast Asian countries.
Japanese manufacturers were more confident to take on additional workers, with the rate of job hiring accelerating to a 30-month high. Meanwhile, buying activity remained in contraction territory, but only just.
Meanwhile, goods producers continued to benefit from lower cost burdens, as input prices decreased for the tenth consecutive month. Reports of reduced raw material costs stemming from the appreciation of the yen led to a fall in input prices. Prices charged also decreased, albeit at the weakest rate since February.