Japan's manufacturing activity expands at slowest pace in seven months in February

[TOKYO] Japanese manufacturing activity expanded at the slowest pace in seven months in February as domestic order growth slowed, but orders from overseas picked up in an encouraging sign that economic growth will continue to expand.

The Markit/JMMA flash Japan Manufacturing Purchasing Managers Index (PMI) fell to a seasonally adjusted 51.5 in February from a final 52.2 in January.

The index remained above the 50 threshold that separates contraction from expansion for the ninth consecutive month but fell to the lowest since July last year.

New orders fell to a preliminary 51.1 from 53.4 in December. The index for new export orders, however, rose to a preliminary 52.8 from a final 51.8 in the previous month as a weakening yen makes Japan's products more competitive overseas.

Data on Thursday showed Japan's annual exports in January jumped the most since late 2013, supported by shipments of cars to the United States and of electronics parts to Asia.

The output component of the flash PMI index was 52.7, unchanged from January. Employment continued to increase, albeit at a slower pace.

The final Markit/JMMA PMI for February will be released on March 2.

Japan's economy emerged from recession in the fourth quarter of last year, but consumer spending and capital expenditure were slower than expected, showing that households and companies are still cautious about the outlook.

Growth is likely to continue this year due to gains in household spending and exports, economists say, but tepid gains in real wages and a slowdown in Europe and China pose risks to the economy.

REUTERS