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Activity In Japan's Manufacturing Sector Slows, BoJ Grows Concerned About Inflation Goal Print E-mail
Daily Forex Fundamentals | Written by Dukascopy Swiss FX Group | Feb 23 15 09:31 GMT

Activity In Japan's Manufacturing Sector Slows, BoJ Grows Concerned About Inflation Goal

'Despite further slides in oil prices and slowing year-on-year growth in the consumer price index, mid-to longer-term inflation expectations have been steadily maintained' -Bank of Japan meeting minutes

Activity in the Japanese manufacturing sector expanded at the slowest pace in seven months in February as domestic orders declined, whereas orders from overseas rose, adding to signs that the nation's economy will continue to recover. The Markit/JMMA flash Japan manufacturing PMI declined to a seasonally adjusted 51.5 in February from a final 52.2 in January. While the index dropped to the lowest level since July 2014, the reading remained above the crucial 50-point mark, which separates contraction from expansion, for the ninth consecutive month. New orders slid to a preliminary 51.1, compared with 53.4 in December. The index for new export orders, in contrast, climbed to a preliminary 52.8 from a final 51.8 in the preceding month as a weakening Yen makes Japan's products cheaper overseas.

In the meantime, three members of the Bank of Japan's policy board questioned the central bank's ability to meet its inflation goal due to slowdown in underlying prices and plummeting oil, which considerably slowed inflation momentum. In a quarterly review of its long-term outlook in January, the BoJ lowered its core consumer inflation projection to 1.0% for fiscal 2015 down from 1.7% estimated three months ago, largely due to the global oil price decline. Policy makers also said that the additional easing measures deployed in October have been having its intended effect.


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