The manufacturing sector of Japan continued to shrink in August; however, at a slower pace, showed the latest Nikkei survey index. “Policymakers will be quite encouraged that it is moving in a positive direction”.
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“There is a suggestion here that things are beginning to improve from all the disruption earlier in the year, which came from the terrorist attacks”, Markit Chief Economist Chris Williamson told Reuters.
The Flash Japan Manufacturing Output Index for August rose to 50.6 from 49.4 in July but the manufacturing PMI remained below the bell-weather 50 mark at 49.6 – up from 49.3 in July. With the index only slightly above the average seen throughout the year to date, growth in the third quarter is likely to be similar to that seen in the first half of the year. But there is little confidence amongst economists about just how much firepower the European Central Bank has left.
The PMI sub-index for manufacturing inched down to 53.6 as companies reported weaker growth in output and new orders while also hiring new staff at a slower rate. Discounting helped drive a PMI covering the bloc’s dominant service industry up to 53.1 from 52.9, also confounding expectations for a dip to 52.8.
The national PMI for the eurozone’s second-largest member recorded an unexpected jump in August, rising to a 10- month high of 51.6 from 50.1 in July. Service providers added fewer staff than in the previous months while their business expectations deteriorated to the lowest level in almost two years.
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Overall business expectations in the services sector declined to the lowest level since December 2014, which is particularly surprising given very supportive monetary policy and there will be further concerns over structural weaknesses.
