Japan Manufacturing PMI Contracts in May: Trade War Effect?

Posted Monday, June 3, 2019 by
Arslan Butt • 1 min read

Japan’s manufacturing activity fell back into contraction in May, according to latest figures released by the Final Markit/Nikkei survey. Japan manufacturing PMI touched 49.8 in May, compared to the flash reading of 49.6 and final reading of 50.2 in April.

50 is considered the threshold value, any figure above which denotes expansion while below it denotes contraction in activity. In recent times, the domestic economy has been showing signs of a slump while due to the US-China trade war, there has been a reduction in demand from China – Japan’s key trade partner.

Meanwhile, new export orders shrank to 47.6 in May, compared to a preliminary reading of 47.1 and a final reading of 47.8 in April. This makes it the sixth consecutive month when new export orders have been in contraction in Japan.

USD/JPY, however, continues to trade well below the 110.00 level possibly over trade war sentiments, seemingly unaffected by this news. At the time of writing, this forex pair is trading at around 108.14.

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