June 28, 2012 / 11:16 PM / 8 years ago

Japan June manufacturing PMI contracts as rebuilding wanes

TOKYO, June 29 (Reuters) - Japanese manufacturing activity shrank in June for the first time in seven months, a survey showed on Friday, in a sign that a boost to the economy from rebuilding areas damaged by last year’s earthquake and tsunami is starting to wane.

The Markit/JMMA Japan Manufacturing Purchasing Managers Index (PMI) fell to a seasonally adjusted 49.9 in June from 50.7 in May.

The index fell below the 50 threshold that separates contraction from expansion for the first time since November 2011, the data showed.

“The latest survey findings indicate that the boost from (reconstruction) efforts is starting to ebb, however, with investment goods producers noting a particularly sharp fall in output during June,” said Alex Hamilton, an economist at Markit.

“This bodes ill for growth heading into the second half of the year, especially given the fragility of demand in external markets,” he said.

The index for new export orders, a leading indicator of Japanese exports, fell to 47.5 from 48.2 in the previous month. This marked the fastest pace of contraction since February, when the index stood at 47.1.

The output component of the PMI index also shrank to 48.7 from 50.8 in May, the first contraction since December 2011.

The Japanese government has been rebuilding the country’s northeast coast after it was overwhelmed on March 11, 2011, by a devastating earthquake and subsequent tsunami.

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