January manufacturing PMI at 8-year high
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[January 31, 2014]
TOKYO (Reuters) — Japanese
manufacturing activity grew in January at the fastest pace in nearly
eight years as new orders for goods expanded at a record rate, a
sign of robust domestic demand before an increase in the sales tax
The Markit/JMMA Japan Manufacturing Purchasing Managers Index (PMI)
rose to a seasonally adjusted 56.6 in January from 55.2 in December.
The index remained above the 50 threshold that separates expansion
from contraction for the 11th consecutive month and reached the
highest level since February 2006.
"Evidence from panelists suggested that the upcoming rise in the
sales tax was a key factor driving the recent expansion, as
customers order early to avoid the higher tariff," said Claudia
Tillbrooke, economist at Markit.
"However, the continued expansion of employment, suggests a degree
of confidence in the longevity of the current upturn."
The output component of the PMI index rose to 61.1 from 58.3 in
December to reach the highest since the data series began in October
The index for new export orders fell to 52.8 in January from 55.7 in
the previous month.
Prime Minister Shinzo Abe's government will raise the 5 percent
sales tax to 8 percent in April to pay for rising welfare costs.
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Since the middle of last year, sales of apartments, houses, cars and
durable goods have been rising as consumers look to buy big-ticket
items before the tax increase.
Some economists worry the tax hike may hit consumption harder than
expected later in the year, and speculate the Bank of Japan may have
to add additional stimulus to the economy soon to limit the damage.
However, the governor of the Bank of Japan last week dismissed the
need for additional monetary easing as prices are headed toward its
inflation target and as overseas economies and demand recover.
(Reporting by Stanley White; editing by
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