Japan’s Manufacturing and Factory Activity Continue to Contract - Forex News by FX Leaders

Japan’s Manufacturing and Factory Activity Continue to Contract

Posted Friday, June 21, 2019 by
Arslan Butt • 1 min read

On Thursday, the Bank of Japan announced to keep its monetary policy steady, but weakening inflation and contraction in factory activity could pressure the central bank to intervene with stimulus efforts soon.

Amid rising trade tensions and a slowdown of economic growth around the world, Japan is struggling to maintain inflation at its 2% target. In May, Japan’s core CPI climbed 0.8% YoY, in line with expectations but lower than the 0.9% in April.

To make matters worse, the Markit/Nikkei flash manufacturing PMI for June fell to a seasonally adjusted 49.5 in June, indicating contraction in the manufacturing sector. The previous month’s final reading was slightly higher at 49.8, making it the second consecutive month in contraction.

Factory output also shows a contraction, with new orders declining from a final reading of 48.7 in May to a preliminary reading of 47.3 in June – the lowest level since June 2016. This has also been the sharpest decline in five months for this figure.

Meanwhile, USD/JPY continues to weaken over continued increase in demand for the safe haven Japanese yen. At the time of writing, this forex pair is trading at around 107.09.

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About the author

Arslan Butt // Index & Commodity Analyst
Arslan Butt is our Lead Commodities and Indices Analyst. Arslan is a professional market analyst and day trader. He holds an MBA in Behavioral Finance and is working towards his Ph.D. Before joining FX Leaders Arslan served as a senior analyst in a major brokerage firm. Arslan is also an experienced instructor and public speaker.
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