Rising new export orders underpin growth in Japan in April
Staff Writer |
April’s survey of Japanese manufacturers indicated a further improvement in business conditions, as output, new orders and employment all continued to rise.
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Export sales strengthened amid reports of higher demand, while purchasing activity was raised to the greatest degree since the start of 2016.
Subsequent pressure on suppliers meant that delivery times lengthened markedly, exacerbated by stock shortages at vendors.
Prices for inputs rose sharply and output charges were raised to the greatest degree for nearly two-and-a-half years.
The headline Japan Manufacturing Purchasing Managers’ Index (PMI) edged higher to a level of 52.7 during April (from 52.4 in March).
Posting above the 50.0 no-change mark for an eighth successive month, the index was at a level amongst the best seen in the past three years.
A ninth successive month of rising production was recorded during April, with the rate of expansion edging up since March.
Panellists linked growth to higher levels of incoming new orders which rose at a solid, albeit slightly weaker rate.
Foreign demand was a source of overall growth, with new export orders increasing to a greater degree amid reports of higher sales to markets across South East Asia.
Market group data indicated growth was concentrated in the capital goods sector, with this category enjoying the strongest rises in output and new orders during April.
Meanwhile, employment continued to rise across the manufacturing industry in April as companies took on extra staff to deal with rising workloads.
Workforce numbers have been increasing continuously since September last year, with the latest data showing growth at a pace close to February’s near three-year peak.
Capacity nonetheless remained under pressure, as evidenced by rising backlogs of work outstanding.
With production requirements rising, manufacturers chose to increase their purchasing activity to the greatest degree for 15 months in April.
This served to place ongoing pressure on suppliers but, faced with stock shortages at their units, average delivery times from vendors lengthened to the greatest degree for two-and-a-half years.
Ongoing rises in demand also served to push-up the cost of raw materials during the month.
Input price inflation accelerated during April to a 28- month high, with companies noting fuel and steelrelated products as key sources of increased overall prices.
Panellists sought to protect margins wherever possible via an increase in their own charges.
Although modest, the latest rise was the greatest since November 2014.
Finally, business confidence strengthened during April with nearly a third of the panel forecasting growth in output.
Client demand and new orders are widely forecast to rise, with growth also set to be supported by the launch of new products. ■