Japan’s manufacturing activity slowed down for the second month in a row on the back of a decline in the country’s export orders.
The Markit/Nikkei Japan flash manufacturing Purchasing Managers Index (PMI) fell to 52.2 in July from a final score of 52.4 in the previous month. That marked the slowest growth rate over the past eight months. However, the index still remains above the psychological level of 50 which separates growth from contraction.
The manufacturing activity has been expanding for 11 straight months.
"The slowdown was driven by stagnation in export orders, amid reports of weaker demand from South East Asia markets," said Paul Smith, senior economist at IHS Markit. "Nonetheless, the sector continues to add jobs, with employment growth remaining amongst the best since the financial crisis."
The index for new export orders fell to 50.0 from 53.4 in June. The output component declined to 51.4 from 52.2 in June.
The employment index rose to a preliminary 53.4 from 53.2 in the previous month. The preliminary index measuring expectations for future output also rose to 63 in July, which is the highest level in almost five years.
The Bank of Japan and the country’s government raised their economic assessments due to growing exports and rising capital expenditure.
Private-sector economists also expressed more confidence in the economic outlook, but this is still not enough for the acceleration in inflation expected by the Bank of Japan and the government.
