Japan’s Manufacturing Activity Grew Due To Domestic Demand in August

Japan’s manufacturing activity grew at a bit faster rate in August as the domestic demand increased according to a preliminary survey on Thursday. Although the export orders dropped adding to the problem with the trade protectionism.

The flash Markit/Nikkei Purchasing Managers Index (PMI) on manufacturing sector increase to 52.5 on a seasonally adjusted in August compared to the 52.3 figure in July. Figures remained above the 50 mark which puts it apart from contraction for the 24th straight month.

The flash data prolonged the growth cycle of Japan’s manufacturing sector for two years, which has been the longest period since the global financial crisis, as described by an economist at IHS Markit.

Adding to that, he said that the expansion was supported by the strengthening domestic market with the most recent data that came out.

Data shows that export orders increased to 52.6 from 50.9 last month, giving emphasis on the steadfast growth of the domestic market. However, the new export orders declined to 49.3 from a final 50.0 in July, showing a decline in two months.

Real wages grew in June, which was the quickest rate over 21  years, signaling consumer spending to further rise.

The economy progressed at a better rate in the second quarter, boosting a strong household and business spending and further strengthening the domestic demand. Yet, concerns on trade disputes add risk in the manufacturing sectors as it may affect the export demands.