TOKYO Aug 1 Japanese manufacturing activity
expanded in July at a slightly slower pace than initially
estimated, revised data showed on Friday, in a sign that
domestic demand has not fully recovered from a sales tax
increase at the start of April.
The final Markit/JMMA Japan Manufacturing Purchasing
Managers Index (PMI) fell to a seasonally adjusted 50.5 in July,
from a preliminary reading of 50.8 and a final 51.5 in June.
The index remained above the 50 threshold that separates
expansion from contraction for the second consecutive month, but
the slowdown in activity could be a source of concern for
Prime Minister Shinzo Abe's government raised the national
sales tax to 8 percent from 5 percent on April 1 to pay for
welfare spending and will decide later this year whether to go
ahead with another sales tax increase next year.
The tax hike in April caused a drop in consumer spending. A
larger-than-expected decline in industrial production in June,
according to government data, has raised concerns the economy
will be slow to recover.
New orders expanded in July but at a slower rate than in
June, while new export orders grew for the first time in four
months, although only modestly, the PMI survey showed.
Policymakers have been counting on an export rebound to help
ease the economic pain from the sales tax hike, but overseas
shipments have been stubbornly weak.
(Reporting by Stanley White; Editing by Kim Coghill)