TOKYO (Reuters) - Japanese manufacturing activity grew at its fastest pace in three months in May as new orders rose, prompting factories to ramp up production, a private survey showed on Thursday, adding to signs the economy is sustaining momentum in the second quarter.
The final Markit/Nikkei Japan Manufacturing Purchasing Managers Index (PMI) rose to 53.1 in May on a seasonally adjusted basis, stronger than a preliminary reading of 52.0 and a final 52.7 in April.
The index remained above the 50 threshold that separates expansion from contraction for the ninth consecutive month.
The final index for new orders, which includes both domestic and overseas orders, rose to 53.4 in April, higher than both the flash reading of 51.4 and 52.4 in the previous month.
The final index for new export orders was 53.0, versus a preliminary 51.6, and a final 53.3 in the previous month.
Data on Wednesday showed Japan's industrial output grew in April at the fastest pace in almost six years, highlighting recent improvements in the economy.
Japanese manufacturers continued to create new jobs at a solid pace as orders rose and business optimism remained high, the PMI survey showed.
The government hopes an increasingly tight labour market will eventually turn around sluggish wages and weak consumer spending.
But the survey also suggested the companies continued to have trouble passing on higher input costs to buyers of their goods, squeezing profit margins and disappointing news for the Bank of Japan as inflation remains stalled well below its elusive 2 percent target.
Reporting by Stanley White; Editing by Kim Coghill