Weak Japan manufacturing data bolsters stimulus argument

<p>Weak Japanese manufacturing data has bolstered Shinzo Abe’s calls for stimulus.</p>

Fresh manufacturing data for Japan has strengthened premier Shinzo Abe's argument that the world's number three economy is in dire need of more stimulus measures.

According to the latest Markit manufacturing purchasing managers' index for the country, output and new orders registered their sharpest contractions for 20 months, while margins remained under pressure as output charges declined.

This report will give Mr Abe – whose Liberal Democratic Party was voted into power after the December 16th general election – more ammunition to push for monetary easing and higher government spending to rescue Japan from decades of deflation and further recession.

However, there are arguments from economists that the prime minister's emphasis on stimulus rather than structural reforms may only have short-lived effects and could worsen debt.

At close of play in Tokyo this morning (December 28th), the Nikkei 225 rose by 0.7 per cent to an index value of 10395.1 points.

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