Japan’s Manufacturing Activity Dropped in July due to New Orders

Japanese manufacturing activity is slower than the July forecast as reported on Wednesday which raises concern despite an increase of new orders.

The final Markit/Nikkei survey showed seasonally adjusted manufacturing Purchasing Managers’ Index (PMI) to 52.3, higher than the flash reading of 51.6, which was the lowest over 18 months. The index was 53.0 in June.

The most recent surveyed data implied a slower manufacturing sector growth in the early days of the third quarter, according to an economist at IHS Markit, Joe Hayes.

The apparent weakened demand and lesser output growth while export sales were not seen to have any record of increase for the second consecutive month.

New orders for the final index was 50.9, which was the lowest since October 2016. Meanwhile, the July flash reading was 50.1 and the final one for June was 52.7. Meanwhile, the index of new export orders was 50.0 compared with the initial figure of 49.7, higher than the final 48.9 in June.

With the escalating trade war between the U.S. and China, there are concerns that President Donald Trump administration could ask Japan to take concrete actions to bring down its trade surplus.

The country is anticipated to bounce off in the second quarter from the decline in the first quarter, putting an end to the longest period since the 1980s bubble economy. Yet, trade protectionism poses a higher risk to the outlook of the economy.