Latest survey data pointed to a stronger improvement in operating conditions at Japanese manufacturers. New order growth accelerated to a seven-month high, while both production and job creation also increased. In contrast, new export orders rose at a slower pace, with reports of reduced trade volumes with China dampening international demand. Meanwhile, prices charged rose at a slight rate, but input prices remained unchanged, having risen in the previous month.
The headline PMI posted at 51.7 in August, up from 51.2 in July, thereby signalling a stronger rate of improvement in operating conditions in the Japanese manufacturing sector. Moreover, the latest reading was the second-highest of 2015 so far.
The overall improvement in the Japanese manufacturing sector was supported by a sharp increase in new orders, with growth accelerating to the fastest since January. According to respondents, successful gains in new clients and advertising campaigns had led to the latest expansion. All three sectors registered growth in new work, with investment goods producers reporting the sharpest increase.
Concurrently, production remained in growth territory for the fourth month in a row. That said, the rate of growth moderated from July’s five-month high and was only modest overall.
Resulting from expansions in both output and new orders, job creation was reported at Japanese manufacturers for the fifth successive survey period. Furthermore, the rate of staff hiring was little-changed from the seven-month high seen at the start of Q3. Similar to output, job creation was evident at all three market groups, with the strongest increase recorded in investment goods.
Meanwhile, volumes of post-production goods were depleted in August and at the fastest rate in more than four-and-a-half years. Panellists suggested that production was unable to keep up with incoming new orders, leading them to use up existing stocks.
On the price front, input prices were unchanged in August, marking the end of a 31-month period of inflation. Where upward cost pressures were reported, panellists blamed the depreciation of the yen, while other companies mentioned lower oil costs helping to reduce input prices. Reversing the decline seen in the prior month, charges rose in August, albeit at a marginal rate.