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Asia PMIs point upwards - BoJ sees downside risk

Tuesday, November 01, 2016 - 01:31

China's PMI reading expands at its fastest in two years and Japan posts its most encouraging manufacturing PMI in 9 months. But as David Pollard reports, the Bank of Japan says it'll take longer to get inflation back up to target than previously thought.

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BROADCAST AND DIGITAL RESTRICTIONS~**Broadcasters: PART NO ACCESS JAPAN/CNN & CNNI, BBC WORLD, NBC, CNBC MUST ON-SCREEN COURTESY 'TV TOKYO' IF PICTURES TO BE SHOWN ON CABLE, COMMUNICATIONS SATELLITE IN JAPAN. Digital: PART NO ACCESS JAPANESE WEBSITES. For the optimists, it's light at the end of the tunnel. China's factory activity at its strongest in over two years, according to the latest data. A sign of a rebound in the world's number 2 economy .... Even the pessimists agree government stimulus measures could be working - if with reservations. (SOUNDBITE) (English) PANMURE GORDON CHIEF ECONOMIST, SIMON FRENCH, SAYING: "A lot of it is based on leverage. A lot of it is based on real estate appreciation and concern is now over non-performing loans over the corporate sector .... There do remain question marks on whether this is a rebound which can be sustained throughout 2017." But from Japan, another positive reading. Its manufacturing PMI the highest in nine months. That data coming through just as the Bank of Japan held its latest meeting. (SOUNDBITE) (English) PANMURE GORDON CHIEF ECONOMIST, SIMON FRENCH, SAYING: "It just means that the long-term prognosis hasn't changed for Japan as a result of this data. It just means that in the short term a little bit of the pressure goes off Governor Kuroda to come back with more stimulus." The Bank of Japan in fact staying its hand, as expected. But cutting its inflation outlook. A target for hitting a 2 per cent rate postponed - by as much as a year. (SOUNDBITE) (English) PANMURE GORDON CHIEF ECONOMIST, SIMON FRENCH, SAYING: "How committed are they to two per cent using the current basket of tools that they have? Are they going to have to explicitly look at helicopter money? That's the question in the market right now." The BoJ sees Japan expanding moderately. But with price momentum weakening, it said, the risks are still tilted to the downside.

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Asia PMIs point upwards - BoJ sees downside risk

Tuesday, November 01, 2016 - 01:31