Japan manufacturing gauge hits 35-month high

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Growth at Japanese manufacturers continued to improve in January as activity in the sector expanded at the fastest rate since early 2014.

The preliminary headline reading for the Nikkei-Markit purchasing managers’ index rose to 53.5 last month, up from December’s reading of 52.7 and gaining further ground on the 50-point threshold that separates expansion from contraction.

Production grew at a faster rate, bolstered by accelerated growth in new orders supported by more substantial demand from abroad, according to the gauge’s sub-indices. That gave a boost to employment, also up at a quicker clip. While input costs rose at a faster pace, prices charged to clients grew more slowly.

This is the sixth consecutive month the headline PMI has been above 50, having gone below that mark from March to August last year during which it hit a record low of 47.7 in May.

Samuel Agass, economist at IHS Markit, which compiles the survey, said:

Encouragingly, with backlogs of work accumulating for the first time in 14 months, the added pressures on capacity should ensure growth will be maintained at a solid pace during at least the first half of this year.

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