21.02.201802:48:00UTC+00Japan Manufacturing Growth Slows in February - Flash PMI

Growth in Japan's manufacturing sector slowed in February as output and new orders increased at a slower rate, according to preliminary survey results.

The Nikkei-Markit flash manufacturing purchasing manager's index slipped to 54 in February, down from 54.8 in January and closer to the 50-point line separating growth from contraction.

Output and new orders both increased, but at a slower pace than the previous month, while employment growth accelerated to an 11-year high.

The index for new export orders dropped to a preliminary 54.0 from a final 57.4 in the previous month to reach the lowest level in three months.

The output component of PMI declined to 53.7, a four-month low, from 54.7 in January.

“Recent yen appreciation has coincided with slower new export order growth,” said Joe Hayes, economist at IHS Markit, which compiles the survey. “Furthermore, a number of panelists indicated that the stronger currency had prompted them to lower prices to overseas customers.”

The yen's appreciation spurred a flurry of comments from Japanese policymakers attempting to talk down their currency.

Japanese policymakers and companies tend to speak unfavourably of a strong yen because this can lower exporters' earnings and increase deflationary pressure by reducing import prices.

Japan's economy has expanded for eight consecutive quarters, the longest continuous growth since a 12-quarter stretch between April-June 1986 and January-March 1989 around the height of Japan's notorious economic bubble.

The flash estimate is based on 85 to 90 percent of PMI survey responses.