Apr 1: A Technical Recession In Japan's Economy Is Increasing
Intraday Market Moving News and Views (USD/JPY)
Apr 01, 2016 03:04GMT
The Markit/Nikkei Final Japan Manufacturing Purchasing Managers Index (PMI) fell to 49.1 in March on a seasonally adjusted basis, but unchanged from a preliminary reading and below the final 50.1 in February.
A latest business survey showed that Japan's manufacturing activity contracted in Marchn at the fastest pace in more than three years as new export orders shrank sharply, adding to fears that the world's third-largest economy is sliding back into recession.
The reading fell below the 50 threshold that separates contraction from expansion for the first time since April last year, and contracted at the fastest pace since February 2013.
The sub-index for new export orders sank to 46.1, above the flash reading of 45.9 but still well below the 49.0 recorded in February. New export orders contracted at the fastest pace since January 2013.
Factory output contracted, albeit mildly, for the first time since April 2015, after growth slowed sharply in February.
This has increased the chances that the economy is in a technical recession, which is defined as two consecutive quarters of contraction in gross domestic product.
Japan's government is considering extra fiscal stimulus to pull the economy out of its funk, and there is a growing chance it will delay a sales tax hike scheduled for next year to ease the burden on domestic demand.
Japanese Finance Minister Taro Aso, while speaking at a news conference after a cabinet meeting on Friday, said that sentiment at some companies has turned cautious recently but on the whole firms remain confident about the economy's prospects. He added that the leading indicators show capital expenditure is rising, which is a positive sign that things are going well for corporate Japan.
However, according to a survey by the bank of Japan, confidence at big Japanese manufacturers worsened in the three months leading up to March, and is seen falling further ahead.