Japan June flash manufacturing PMI falls again

The IHS Markit/Nikkei Flash Japan Manufacturing Purchasing Managers Index (PMI) fell to a seasonally adjusted 49.5 in June from a final 49.8 in the previous month.

TOKYO: Japanese manufacturing activity contracted again in June as new orders fell at the fastest pace in three years, pointing to growing pressure on the economy amid weakening demand at home and abroad, a preliminary survey showed on Friday.

The IHS Markit/Nikkei Flash Japan Manufacturing Purchasing Managers Index (PMI) fell to a seasonally adjusted 49.5 in June from a final 49.8 in the previous month.

The index was at its lowest since March, and below the 50 threshold that separates contraction from expansion for the second straight month.

"June survey data reveals a further loss of momentum across the manufacturing sector," said Tim Moore, associate director at IHS Markit, which compiles the survey.

"Softer demand in both domestic and international markets contributed to the sharpest fall in total new orders for three years."

Factory output contracted at a much more modest rate, but orders -- a key indicator of future activity -- pointed to further factory weakness ahead.

The index for new orders, domestic and foreign, fell to a preliminary 47.3 from a final 48.7 in May to the lowest level since June 2016. New export orders fell at the sharpest pace in five months.

May trade data on Wednesday drew renewed attention to how exposed Japan's trade-reliant economy is to a global growth slowdown, with exports down for a sixth straight month as China-bound shipments deteriorated again.

The downbeat figures for the world's third-largest economy come as the United States and China signal they are re-engaging in talks aimed at resolving their escalating trade war.

Japan is exposed to the dispute as it exports big volumes of electronics items and heavy machinery to China which are used to make finished goods shipped to the United States.

Further underlining the fragile growth outlook, firms' backlogs of work dropped to a more than six-year low.

"Backlogs of work were depleted to the greatest extent since January 2013, which will likely act as an additional drag on production volumes in the months ahead," IHS Markit's Moore said. - Reuters