Japanese Yen Weakens As Manufacturing Contracts, Jobless Rate Rises

The Japanese yen is slipping against most major currency rivals to start the trading week, driven by considerable weakness in the nation’s manufacturing sector, housing industry, and labor market. Although Tokyo had experienced some positive economic data early last week, these were offset by bearish trends throughout the economy.

The Jibun Bank Japan manufacturing purchasing managers’ index (PMI) was revised downward to 48.4 in October, down from 48.9 in September. This was the sixth consecutive month of contraction, as well as the eighth time in 2019 that the index slumped below 50. It also represented the biggest decline since June 2016.
Japanese manufacturing has been hit by a seven-month-low in output and a three-year low in total new orders. Plus, buying levels have slumped to their lowest rates in three months.
The unemployment rate edged up 0.2% to a five-month high of 2.4% in September, higher than the market forecast of 2.3%. The jobs-to-applications ratio dipped to a two-year low of 1.57, which was under the median estimate of 1.59.
In September, construction orders tumbled 6.8%, but it was a significant improvement from the 25.9% drop from August. Housing starts also decreased 4.9% in September, up from the 7.1% decline in the previous month.
Surprising analysts, consumer confidence came in at 36.2%, which beat market forecasts of 34.9.
Meanwhile, the Japanese government estimates that the new US-Japan trade agreement could trigger a 0.8% boost in the Tokyo economy. The report projects that the gross domestic product (GDP) could jump $36.84 billion and create more than 280,000 jobs because of the trade deal.
This comes after the Ministry of Finance confirmed that exports slipped 5.2% to $590 billion in September, falling short of the median estimate of 4%.
The USD/JPY currency pair rose 0.37% to 108.58, from an opening of 108.19, at 15:51 GMT on Monday. The EUR/JPY advanced 0.19% to 121.03, from an opening of 121.11.

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