Japanese manufacturing activity also expanded at a faster pace in April, a survey showed on Tuesday, with domestic demand picking up but export order growth slowing sharply due to the stronger yen.
In contrast to the trend we saw over the previous two months - and despite reports of improving domestic demand conditions - staffing levels stagnated at the start of Q2-2018.
Manufacturing employment rose for the forty-fourth month running in April.
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"While temporary factors make it hard to gauge underlying momentum, the recovery from March's low point is somewhat underwhelming and provides an indication that the construction sector has been treading water at the very best in recent months". Companies attributed the sustained increase in staffing levels to solid growth of new orders and output, alongside a continued accumulation of backlogs of work (a by-product of robust demand testing capacity).
The report also underlined that input price inflation faced by euro area manufacturers remained substantial in April, reflecting ongoing rises in commodity prices, in some cases exacerbated by supply-side constraints such as raw material shortages. According to the panelists, stronger demand conditions supported the latest growth.
April PMI came in at 48.6 (March: 49.5), the lowest in six months.
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Part of the increase in purchase prices was passed on to clients in the form of higher output charges in April.
IHS Markit said optimism among manufacturers dipped to a five-month low in April as concerns about Brexit, trade barriers and the overall economic climate remained widespread. "House building at least seems to be moving in the right direction, and by achieving its fastest rate of growth since May 2017 it has gone from a laggard to a construction leader again".
Ms Ling expects manufacturing growth to ease to around 6.3 per cent year on year in the second quarter, after the first quarter's strong 10.1 per cent showing.
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Output increased at a faster rate last month than in March, while the contraction in employment narrowed. "Meanwhile, investment goods was the weakest performing category as both production and new orders declined during April". That suggest Asia's third largest economy is in good heart as disruptions from a shock ban on high-value currency notes in November 2016 and the chaotic launch of a goods and services tax (GST) in July fade.