November 2, 2015 / 2:10 AM / 2 years ago

Japan final October manufacturing PMI hits one-year high as demand grows

Employees work an assembly line at a factory of Glory Ltd., a manufacturer of automatic change dispensers, in Kazo, north of Tokyo, Japan, July 1, 2015. REUTERS/Issei Kato

TOKYO, Nov 2 (Reuters) - Japanese manufacturing activity in October expanded at the fastest pace in a year as new domestic and export orders increased, a private business survey showed on Monday.

The Markit/Nikkei Japan Final Manufacturing Purchasing Managers Index (PMI) rose to a seasonally adjusted 52.4 in October, slightly less than a preliminary reading of 52.5 but a solid improvement from the final reading of 51.0 in September.

The index remained above the 50 threshold that separates expansion from contraction for the sixth straight month. October’s performance was the strongest in a year.

The findings add to evidence that the world’s third-largest economy is recovering from a dip earlier this year as demand at home and abroad is starting to pick up.

The PMI for new export orders was 52.2 in October, just above a preliminary 52.1 and showing a return to growth from 48.0 in the previous month.

The index for overall new orders - both those at home and abroad - was 54.2 in October. This was less than the flash reading of 54.9 but still the fastest expansion in a year.

Japan’s economy contracted in April-June and there is a chance it could contract again in July-September.

However, upbeat PMI data for October could support the argument that domestic demand is finally improving and that overseas demand is starting to shake off the impact of slowdowns in China and other emerging markets.

Data last week showing an unexpected rise in September industrial output was another sign that the economy is starting to grow again.

Rhe Bank of Japan held off on expanding its already massive stimulus program on Friday, preferring to save its dwindling policy options in the hope that the economy can overcome the drag from China’s slowdown without additional monetary support.

Reporting by Stanley White; Editing by Kim Coghill

Contact info: stanley.white@thomsonreuters.com; +81 3 6441 1984 twitter.com/stanleywhite1; Reuters Messaging: stanley.white.reuters.com@reuters.net

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