December 15, 2016 / 12:39 AM / 7 months ago

Japan December flash PMI shows factory activity growth fastest in 11 months

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An engineer makes an arm rail for residential buildings inside a metal processing factory at an industrial zone in downtown Tokyo, Japan, March 22, 2016.Yuya Shino

TOKYO, Dec 15 (Reuters) - Japanese manufacturing activity grew at the fastest pace in almost a year in December as new orders improved in a sign that domestic demand is gathering strength, a survey showed on Thursday.

The Flash Markit/Nikkei Japan Manufacturing Purchasing Managers Index (PMI) for December rose to a seasonally adjusted 51.9 from a final 51.3 in November.

The index remained above the 50 threshold that separates expansion from contraction for the fourth consecutive month and showed activity expanded at the fastest pace since January.

"Latest survey data pointed to a further improvement in the Japanese manufacturing sector," said Amy Brownbill, economist at IHS Markit, which compiles the survey. "Output and new orders both increased at sharper rates, with new work inflows rising at the quickest pace since January."

The index for new orders, which measures both domestic and external demand, rose to a preliminary 52.8 from 51.1 in the previous month, also the highest in 11 months.

However, the flash index for new export orders eased slightly to 51.7 from 51.9 in the previous month.

Sentiment among large manufacturers hit a one-year high in December as a weak yen brightened the outlook for exports, the Bank of Japan's closely-watched tankan business sentiment survey showed on Wednesday.

Companies also maintained upbeat capital expenditure plans in the tankan survey, suggesting the economy will pick up pace next year.

Reporting by Stanley White; Editing by Shri Navaratnam; stanley.white@thomsonreuters.com; +81 3 6441 1984 twitter.com/stanleywhite1; Reuters Messaging: stanley.white.reuters.com@reuters.net

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