Japan Feb manufacturing PMI up, input prices surge

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TOKYO Feb 28 (Reuters) - Japanese manufacturing activity expanded at the fastest pace in eight months due to export demand, a survey showed on Monday, but input prices were at their highest in more than two years in an ominous sign for corporate earnings.

The Markit/JMMA Japan Manufacturing Purchasing Managers Index (PMI) rose to a seasonally adjusted 52.9 in February from 51.4 in January.

The index was above the 50 threshold that separates contraction from expansion for the second month and showed that manufacturing grew at the fastest pace since June 2010.

"PMI data pointed to a sustained rebound in manufacturing activity during February, as an upturn in new export order growth helped boost production across Japan's factories and workshops," said Alex Hamilton, economist at Markit.

"However, a surge in cost inflation will place unwelcome pressure on firms' operating margins in the months ahead, as strong competition for new business continues to restrict their pricing power."

The index for new export orders, a leading indicator of Japanese exports, rose to 54.0 from 50.8 in the previous month, to reach the highest level since July 2010.

The index for input costs surged to 61.4, the highest since October 2008, due to rising fuel and raw materials costs.

The output component of the PMI index gained to 53.9 from 52.0 in January to reach the highest level since June last year. (Reporting by Stanley White; Editing by Edwina Gibbs)