January 30, 2012 / 11:16 PM / 8 years ago

Japan Jan manufacturing PMI expands; firms warn on Europe

TOKYO, Jan 31 (Reuters) - Japanese manufacturing activity expanded in January at the fastest pace in five months as companies recovered from supply chain disruptions, a survey showed on Tuesday, but firms warned that Europe’s debt crisis and a slowdown in China will hurt export demand.

The Markit/JMMA Japan Manufacturing Purchasing Managers Index (PMI) rose to a seasonally adjusted 50.7 in January from 50.2 in December.

The index remained above the 50 threshold that separates contraction from expansion for two consecutive months. The index also marked the highest reading since 51.9 in August 2011.

Japanese manufacturing activity weakened twice last year as Japan’s record earthquake on March 11 and floods in Thailand’s industrial base from late July disrupted Japanese firms’ supply of parts.

“January PMI data suggest that the sector has begun 2012 on a firmer footing following a year in which supply chain disruptions emanating from March’s earthquake and flooding in Thailand disrupted firms’ production plans,” said Alex Hamilton, an economist at Markit.

“However, the survey findings paint a relatively flat growth picture, and demand for Japanese manufactured goods remains muted. Companies cited sluggish demand from China and Europe as the principal drag on new export order growth.”

The index for new export orders, rose to 50.2 from 49.1 in the previous month, just barely breaking above the 50 threshold to show the first expansion since February last year.

The output component of the PMI index rose to 51.4 in January from 49.6 in December to show the first expansion in three months.

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