Japan July manufacturing PMI rises to 52.1 from 50.7 in June

TOKYO, July 29 (Reuters) - Japanese manufacturing activity expanded in July at the fastest pace in five months as supply chains recovered from the March 11 disaster and companies brought forward production to avoid possible power shortages in the summer, a survey showed on Friday.

The Markit/JMMA Japan Manufacturing Purchasing Managers Index (PMI) rose to a seasonally adjusted 52.1 in July from 50.7 in June. The index remained above the 50 threshold that separates contraction from expansion for a third straight month and rose to its highest since February.

The output component of the PMI index rose to 53.1 in July from 52.7 in June, also the highest since February.

"Japan's manufacturing recovery continued at pace in July, as supply chain pressures eased and new business returned to growth," said Alex Hamilton, an economist at Markit.

"Manufacturers added to their staff numbers for the first time since the earthquake and tsunami, a trend that - if sustained in the coming months - will be seen as a vote of confidence in the economic outlook."

The employment index rose to 50.9 from 49.5 in June, showing the first month of job growth since March.

The index for new export orders, a leading indicator of Japanese exports, fell to 48.8 from 49.0 in June to reach the lowest level since April due to reduced demand from China, the data showed. (Reporting by Stanley White; Editing by Michael Watson)