Japan’s Manufacturing Growth Increase but Export Decline

Manufacturing activity in Japan grew at a faster pace this month compared in March, considering demand growth in domestic and output. This indicates that the economy was able to recover from the expected difficult path in the first quarter.

Nevertheless, a private poll further showed that export orders decline for the first time after more than a year and a half due to gradual appreciation in the Japanese currency that weaken the competitiveness of Japan’s export. On one hand, the flash Markit/Nikkei Japan Manufacturing Purchasing Managers Index (PMI) was able to reach as high as 53.3 based on the seasonally adjusted in April versus the 53.1 in March.

The Japanese yen increased by 4 percent against the US dollar since 2018 started and there are economists who are concerned that exports in the country would soften if the JPY would grow as it could move export prices higher. According to forecast, the economy could develop annually by 0.5 percent in Q1 since consumer expenditure and factory output was reduced based on Reuters polls.