June 1, 2018 / 12:42 AM / 6 months ago

Japan final May PMI confirms slowdown in factory growth

Chimneys and cranes are seen at an industrial area in Yokohama, Japan, January 16, 2017. Picture taken January 16, 2017. REUTERS/Kim Kyung-Hoon

TOKYO, (Reuters) - Japanese manufacturing activity expanded in May at the slowest pace in seven months as new orders cooled, a revised survey showed on Friday, signalling a softening in domestic demand.

The final Markit/Nikkei Japan Manufacturing Purchasing Managers Index (PMI) was a seasonally adjusted 52.8, higher than the flash reading of 52.5 but still below a final 53.8 in April.

The index was at the lowest in seven months, though it has remained above the 50 threshold that separates expansion from contraction for the 21th consecutive month.

“Total new orders increased to a softer extent, while the exports index increased for the first time since January,” said Joe Hayes, economist at IHS Markit, which compiles the survey.

“A stronger improvement in foreign demand for Japanese goods will be welcomed; however the pace of expansion in May remains markedly below those seen at the start of the year prior to the JPY appreciation.”

The final index for new orders was 53.0, versus a preliminary 52.3 and below the 53.8 in the previous month in a sign that domestic consumption in the world’s third-biggest economy weakened slightly. Output also expanded at a slower pace from April.

The exports picture was slightly more positive, however, with the final index for new export orders at 51.1, up from the flash reading of 51.0 and 50.4 in May, pointing to a pick up in world demand.

Reporting by Stanley White; Editing by Shri Navaratnam

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