A reading of the PMI, or Nikkei Manufacturing Purchasing Managers’ Index, being above 50 is an indication of the expansion of the manufacturing economy. A below 50 reading means the economy is shrinking. In March, the PMI rose from 51.1 to 52.4.
The PMI of the electronics sector also registered an increase in March, from 48.2 to 49.0. Overall operating conditions in the private sector firms saw a small improvement in the first quarter of 2016, thanks to stronger domestic demand. This drove growth of new orders to the year’s fastest pace. Preproduction industries increased as an effect of the increasing purchasing activity.
Experts believe that the strengthening euro to the sterling helped with growth, but panellists specified that the source of new business mostly came from the United Kingdom.
For the first time in five months, new export orders decreased. However, finished goods holdings slumped even bigger in March than they did in August of 2015. All orders were fulfilled right from stocks.
A survey revealed that overall growth of US manufacturing slowed in the first quarter, highlighting weakness in the sector. The survey was taken across employment, new orders, output, stock and delivery times. Fast expansion did not help to lift output growth, and there was little change in workforce numbers.
Little demand is the reason behind slow growth and falling prices. Different firms are forced to compete, regardless of profit margins. Price trends also affected growth. Imported raw materials became costlier thanks to drops in oil and commodity prices, balanced with a weaker rupee. Input prices are also in an eight-month low with inflationary pressure.
(header img via wired.com)