Export orders drove Japan’s manufacturing activity in April

A pick-up in export orders helped lift a gauge measuring manufacturing activity in Japan during April.

The Nikkei-Markit purchasing managers’ index rose to 52.8 from 52.4 in March, keeping the barometer of health in the sector above the 50 mark, which separates expansion from contraction.

This was the highest level since February, which in turn was the highest level in at least three years.

Sub-indices measuring output, new export orders, employment, input and output prices all increased at a faster rate than the previous month. Although new orders grew, they did so a slower rate than before.

Paul Smith, senior economist at IHS Markit, said:

Driven by firmer external demand, the sector was underpinned by a stronger export performance in April, with new export orders rising at a rate amongst the best seen in the past three years. Companies are also adding to their workforces at a rate that matched January’s 34-month peak, but price pressures continue to mount with input costs and output charges rising at stronger rates.

Pointing to the bounce in new export orders – and himself forecasting a 10 per cent annual gain in export volumes – Marcel Thieliant at Capital Economics said “there are no signs that the renewed appreciation of the exchange rate since the start of the year has undermined external demand”.

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