- Donald Levit, a strategist at EconomicCalendar.com
Growth in Japan's manufacturing activity slowed sharply in February as new export orders fell at the fastest pace in three years, a worrying sign that external demand is weakening rapidly as China's economy slows. The Markit/Nikkei Flash Japan Manufacturing PMI dropped to 50.2 in February on a seasonally adjusted basis, down from a final 52.3 in January. However, the reading remained above the 50 threshold that separates contraction from expansion for the 10th straight month. The sub-index for new export orders declined to a preliminary 47.9 from 53.1 in January, which would indicate the biggest drop since February 2013 if confirmed. Exports in January tumbled by the most since the global financial crisis, in a clear indication that financial market turmoil and slowing emerging market economies have undermined demand abroad.
The report is a sign that businessmen are not confident that the government and the Bank of Japan's moves to support the economy are effective, not even the BOJ's January decision to cut the interest rate it charges banks to below zero. While analysts expect a moderate recovery this year, stagnant wages, sluggish consumer price growth and faltering global growth have raised fresh doubts about Prime Minister Shinzo Abe's mix of stimulus policies aimed at kick-starting the world's third biggest economy .
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