Japan’s Manufacturing PMI Slightly Increases; Services PMI Shows Strong Growth


  • The au Jibun Bank Flash Japan manufacturing purchasing managers’ index (PMI) was 48.0 in January, slightly higher than December’s 47.9.
  • Output and new orders, although in a contraction, have shown marginally better performance than the previous month.
  • Input price inflation persisted in January but was lower than the three-month high recorded in December.
  • The services PMI of au Jibun Bank Flash increased to 52.7 in January due to strong new business growth.
  • The Bank of Japan maintained its ultra-easy monetary policy, waiting to see if wage increases are sufficient to sustain the inflation target.

Details on Japan’s Manufacturing Industry

There was a minor fluctuation in the flash manufacturing PMI of au Jibun Bank for Japan, from a final 47.9 in December to 48.0 in January, according to the latest data out. Since June, the headline index has stayed below the 50.0 mark, the line between contraction and growth.

Output and new orders, the two main sub-indexes responsible for the headline figure, saw marginal recovery over the last period despite being in a contractionary state.

Economist’s Outlook

According to S&P Global Market Intelligence economist Usamah Bhatti, a stabilisation of work backlogs in January may signal improved demand supporting production, rather than the fulfillment of existing orders.

Inflation Trends

January saw continuing input price inflation, although the extent decreased from the three-month high of December. Output charges have risen, but at its lowest rate since June 2021.

Performance of the Services Sector

The Flash Services PMI from au Jibun Bank experienced an increase in January, reaching 52.7 from a final 51.5 in December. New business growth, the most powerful since last September, drove this growth. International demand for services saw a growth after a lapse of five months.

In the upcoming year, the level of optimism within the service sector remained high.

The Combined Sector Performance

The composite PMI of au Jibun Bank, a combined indicator of manufacturing and service sector activity, moved up to 51.1 in January from 50.0 in December.

Monetary Policy in Japan

The Bank of Japan kept its ultra-accommodative monetary settings unchanged in a move anticipated by most observers. Policymakers are allowing more time to evaluate if wage hikes will be broad enough to keep inflation sustainably at the 2% target.

These developments and trends can have significant implications for forex trading, potentially affecting assets related to the Japanese economy.

PIP Penguin