TOKYO, March 31 Japanese manufacturing activity expanded at a slower pace in March, a survey showed on Monday, pulling back further from an eight-year high set in January as heavy snow in some areas curbed production.
The Markit/JMMA Japan Manufacturing Purchasing Managers Index (PMI) fell to a seasonally adjusted 53.9 in March from 55.5 in February.
The index remained above the 50 threshold that separates expansion from contraction for a 13th consecutive month but showed that growth slowed for a second straight month.
"Firms attributed this increase in output to last minute demand before the increase in the sales tax from 5 percent to 8 percent, which is due to be implemented in April this year," said Amy Brownbill economist at Markit.
"It will be interesting to see whether output in the manufacturing industry will continue to grow as fast after the increase in the sales tax is implemented."
The output component of the PMI index fell to 54.2 from 58.4 in February, indicating the slowest growth in six months due to disruptions caused by unusually cold weather.
The index for new export orders rose to 52.3 in March from 51.5 in the previous month as orders from China and the Philippines strengthened, the survey showed.
Prime Minister Shinzo Abe's government will raise the sales tax from April 1 to pay for rising welfare costs.
Since the middle of last year, sales of apartments, houses, cars and durable goods have been rising as consumers look to buy big-ticket items before the tax increase.
There are also signs that consumers stocked up on daily goods in the days leading up to the tax hike.
Many economists expect the sales tax increase to slow growth temporarily, but there are lingering concerns the economy will not rebound quickly, which would increase the need for stimulus measures. (Reporting by Stanley White; Editing by Jacqueline Wong)