Economy

Japan manufacturing activity shrinks for fourth month in August: PMI

Japan manufacturing activity shrinks for fourth month in August: PMI”

While an improvement on July, that month's reading was the euro zone's lowest since December 2012.

While Japan's exports slipped for an eighth month in July due to slumping China-bound sales, the economy has so far enjoyed steady growth thanks to robust domestic demand.

Factories suffered their sharpest contraction in seven years in August as they struggled to pull out of a deepening downturn triggered by a global trade war and no-deal Brexit worries.

"With the CIPS surveys tending to be overly sensitive to political uncertainty and auto makers maintaining production in August (having brought their annual summer shutdowns forward this year), the sector's performance is unlikely to be that grim", he said.

"As some clients from the Eurozone continued to move their supply chains away from the United Kingdom, declining orders from the USA and Asia dashed any hopes of redemption, resulting in the sharpest fall in business optimism since at least 2012", said Brock.

Business confidence falls to series-record low.

"It's not only the US-China trade war".

Japan manufacturing activity shrinks for fourth month in August: PMI

ASIAN STRAIN Export-reliant South Korea, Japan and Taiwan saw factory activity shrink, underscoring the growing pain from the tit-for-tat tariff war between the world's two-largest economies.

"Japanese goods producers continued to signal hard conditions during August", said Joe Hayes, economist at IHS Markit, which compiles the survey.

Based on its historical relationship against official ONS data, the latest PMI Output Index is consistent with a quarterly pace of contraction close to 2%. The Reserve Bank of India (RBI) has so far cut benchmark interest rates four times since January, bringing the repo rate to 5.4% in August. "Softer growth across Asia, particularly in China, was reported to have dented export opportunities".

But there are signs the economy may start to lose the support from consumption and capital expenditure.

Manufacturers surveyed in the PMI data said the end of a construction spike ahead of the 2020 Tokyo Olympic Games and a scheduled sales tax rise in October are expected to hurt output volumes the coming months.

The survey is likely to strengthen expectations for monetary easing from the European Central Bank next week.

Factories blamed weakening global growth, simmering US-China trade tensions and Brexit uncertainty for another unexpected slide in the closely watched.

More news: Los Angeles Chargers give Melvin Gordon permission to seek a trade



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