Ja­pan fac­tory out­put in Fe­bru­ary slows

The Pak Banker - - BUSINESS -

TOKYO: Growth in Ja­pan's man­u­fac­tur­ing ac­tiv­ity slowed sharply in Fe­bru­ary as new ex­port or­ders con­tracted at the fastest pace in three years, a wor­ry­ing sign that over­seas de­mand is de­te­ri­o­rat­ing rapidly as China's econ­omy slows, a pre­lim­i­nary sur­vey showed on Mon­day. The Markit/Nikkei Flash Ja­pan Man­u­fac­tur­ing Pur­chas­ing Man­agers In­dex (PMI) fell to 50.2 in Fe­bru­ary on a sea­son­ally ad­justed ba­sis from a fi­nal 52.3 in Jan­uary. But it re­mained above the 50 thresh­old that sep­a­rates con­trac­tion from ex­pan­sion for the 10th con­sec­u­tive month. The sub-in­dex for new ex­port or­ders fell to a pre­lim­i­nary 47.9 from 53.1 in Jan­uary, which would in­di­cate the big­gest con­trac­tion since Fe­bru­ary 2013 if con­firmed in fi­nal data. Ex­ports in Jan­uary tum­bled by the most since the global fi­nan­cial cri­sis, in a clear in­di­ca­tion that fi­nan­cial mar­ket tur­moil and slow­ing emerg­ing mar­ket economies have eroded de­mand abroad. Un­der pres­sure from fal­ter­ing global de­mand, to­tal new or­ders from cus­tomers at home and over­seas also changed di­rec­tion and con­tracted, while job cre­ation cooled to a five-month low. Com­pa­nies cut sell­ing prices for the third month in a row, and more sharply than in Jan­uary, likely re­flect­ing both fall­ing com­mod­ity prices and slug­gish de­mand. Ja­pan's econ­omy con­tracted more than ex­pected in the fourth quar­ter due to weak house­hold spend­ing and ex­ports. While an­a­lysts ex­pect a mod­er­ate re­cov­ery this year, stag­nant wages, de­pressed con­sumer prices and fal­ter­ing global growth have raised fresh doubts about Prime Min­is­ter Shinzo Abe's cock­tail of stim­u­lus poli­cies aimed at re-en­er­giz­ing the econ­omy and quash­ing years of de­fla­tion.

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