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21 Jan 2016
JPY: Manufacturing PMI to tick higher in January - Nomura
FXStreet (Delhi) – Masaki Kuwahara , Research Analyst at Nomura, notes that in METI's survey of production forecasts, manufacturers said they expect production to increase 6.0% m-o-m in January.
Key Quotes
“Assuming the forecasts are accurate, we think a sharp increase in the manufacturing PMI would be plausible. That said, actual production has tended to fall far short of the production forecasts, we think forecasts for January could be overstated to compensate for distortions related to seasonal adjustments, and industrial production and manufacturing PMI are not that highly correlated on a monthly basis.
We would not be surprised if manufacturing activity picks up in view of production enhancements at transportation equipment makers, which have expanded production capacity in Japan, and in view of progress made by electronic parts manufacturers to restore inventory to appropriate levels.
Given the likelihood of an increase in production activity in January owing to the timing of the Lunar New Year this year, we think the manufacturing PMI is likely to be up m-o-m in January.”
Key Quotes
“Assuming the forecasts are accurate, we think a sharp increase in the manufacturing PMI would be plausible. That said, actual production has tended to fall far short of the production forecasts, we think forecasts for January could be overstated to compensate for distortions related to seasonal adjustments, and industrial production and manufacturing PMI are not that highly correlated on a monthly basis.
We would not be surprised if manufacturing activity picks up in view of production enhancements at transportation equipment makers, which have expanded production capacity in Japan, and in view of progress made by electronic parts manufacturers to restore inventory to appropriate levels.
Given the likelihood of an increase in production activity in January owing to the timing of the Lunar New Year this year, we think the manufacturing PMI is likely to be up m-o-m in January.”