Japanese PMIs for January, services and the composite
IHS Markit:
- January PMI data shows continued growth in Japanese service sector output.
- Indeed, activity rose at a faster pace amid a stronger expansion in new business inflows.
- This supported forecasts of further economic growth by panellists, with business optimism strengthening to a 56-month high.
- Input cost inflation accelerated to the sharpest rate since August 2008, with higher food and fuel expenses cited as a principal factor behind the uptick.
- However, demand growth spurred on firms to raise output prices at the fastest pace since May 2014.
- The Bank of Japan does not expect the 2% target to be attained until at least April 2019, with December 2017 core CPI rising at an annual rate of 0.9%.
- That said, with PMI and official data signalling sustained increases in output and employment, domestic inflationary pressures are not lacking. A continuation of yen appreciation against the US dollar could undermine the BoJ's commitment to ultra-loose monetary policy, however.
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USD/JPY is dribbling a little lower as Tokyo and Asia mornings progress