Orix Capital Trading - Japanese Output Achieves Long Overdue Increase

    LONDON, ENGLAND, August 26, 2016 /24-7PressRelease/ -- This was according to a survey sponsored by private interests released on Monday.

There was a marginal increase in the IHS Markit/Nikkei Japan Flash Manufacturing Purchasing Managers Index (PMI) to 49.5 this month compared with 49.2 last month.

The 50 mark on the headline index is the dividing line that separates contraction from expansion in the semi-annual period, however, the 49.5 was still encouraging to economists as it shows the rate of decline was very small.

There was a preliminary reading of 50.7 for the PMI and analysts are awaiting confirmation with revised data. If the numbers are correct it would represent the first gain since January.

Director of Asset Allocation at Orix Capital Trading, Steve Rogers commented on the report in an email to clients, "If the survey is confirmed next week it will be a welcome set of stats for the Japanese investor. Expansion of output for the first time since very early in the year, although marginal, is a significant indicator that we may be at the start of an upswing."

Although export orders fell badly again this month, there was a slowdown in the decline, possibly due to price cuts on the part of the nation's biggest export firms like Honda, Toyota and Sony. It's the fastest rate of price cuts in four years, as corporations desperately try and attract foreign importers.

As the yen spiralled up in Q2 of this year, exports declined and consumer spending fell, resulting in a stalling of Japan's encouraging growth trend.

As usual, the fiscal authorities have announced they will boost the monetary base with stimulus totalling 14 trillion yen, hoping the cash injection will support what looks like a mild economic recovery.

In a change to their normal strategy, however, the stimulus this time will focus more on specific building projects domestically, which would encourage capital outflow and could spur manufacturing even further.

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