World Economy

Japan Begins 2017 on Strong Footing

PMI rose to 52.8 in January from 52.4 in the previous month.PMI rose to 52.8 in January from 52.4 in the previous month.

Japanese manufacturing activity expanded in January at the fastest pace in almost three years as export orders surged, suggesting that overseas demand is not as weak as some economists and business leaders had feared.

The Markit/Nikkei Japan Flash Manufacturing Purchasing Managers Index rose to a seasonally adjusted 52.8 in January from a final 52.4 in the previous month, Reuters reported.

The index remained above the 50 threshold that separates expansion from contraction for the third consecutive month and showed that activity expanded at the fastest since March 2014.

“The Japanese manufacturing sector started the new year on a strong footing,” said Amy Brownbill, economist at IHS Markit, which compiles the survey. “The rise in total incoming new orders was driven in part by a sharp increase in international demand, as new export orders rose at the quickest rate in over a year.”

The preliminary index for new export orders rose to 53.2 from a final 51.1 in December, indicating the fastest gain in 14 months.

The flash index for new orders, which measures both domestic and external demand, rose to 54.1 from 53.2 in the previous month, the highest in 13 months.

Some economists have expressed concern about Japan’s economic outlook because its exports could suffer if US President Donald Trump adopts protectionist trade policies.

The flash PMI index offers evidence that global trade is picking up, which is a benefit for Japan’s export-focused economy.

 Trump Concern

Japan should push back if Trump basis trade and other economic policy on “wrong economics,” an adviser to Prime Minister Shinzo Abe told Reuters in an unusually direct expression of concern about potential protectionism.

Koichi Hamada, emeritus professor of economics at Yale University and cabinet adviser, also said Abe could relax his timetable for balancing the budget in the next four years and should be ready to further delay a planned sales-tax hike to ensure economic growth.

Threats by Trump to impose a “border tax” on imports and take other protectionist measures have raised uncertainties about global trade.

“There is some danger if he basis his decisions on wrong economics without listening to good advisers, and if he thinks that he could manage national economic matters as he does his real-estate company,” Hamada said in an interview.

“If the United States were to be led by a near-autocrat and if Japan cooperates just to please him, that would break the whole world system,” he said.

And if Trump should criticize Japan for not going along, Hamada said Tokyo should respond: “You’re wrong. Please heed the views of your own experts.”

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