Japan's latest PMI data supports the view of Capital Macro that the Bank of Japan may raise interest rates sooner rather than later. Japan's composite PMI rose to a four-month high of 51.4 in June. Both manufacturing and services PMI rose slightly in June. Capital Macro economist Abhijit Surya wrote that the manufacturing output index indicates a reacceleration of industrial production, while new export orders indicate moderate sales growth. The services PMI is well above historical average levels, consistent with significant growth in consumer spending. In summary, it is expected that the Bank of Japan has reason to raise interest rates in October, rather than as many expect, in early next year.
