March 22, 2016 / 2:11 AM / 4 years ago

Japan March manufacturing activity contracts as export orders tumble: flash PMI

An engineer makes an arm rail for residential buildings inside a metal processing factory at an industrial zone in downtown Tokyo, Japan, March 22, 2016. REUTERS/Yuya Shino

TOKYO, (Reuters) - Japan’s manufacturing activity contracted in March for the first time in almost a year as new export orders shrank sharply, a preliminary business survey showed on Tuesday, in a worrying sign that the global economy is weakening.

The Markit/Nikkei Flash Japan Manufacturing Purchasing Managers Index (PMI) fell to 49.1 in March on a seasonally adjusted basis from a final 50.1 in February.

It fell below the 50 threshold that separates contraction from expansion for the first time since April last year.

The sub-index for new export orders fell to a preliminary 45.9 from 49.0 in February, which would indicate the sharpest contraction since January 2013 if confirmed by the final report.

Japan’s exports fell for a fifth straight month in February, separate data from the finance ministry showed last week.

Some economists say Japan’s exports could remain weak for some time as a slowdown in China and other emerging markets weighs on demand for Japanese machinery and electronics.

Japan’s economy, the world’s third-largest, shrank in the final quarter of 2015 as slow wage growth and sluggish global demand hurt consumption and exports.

While many analysts expect growth to have rebounded modestly in the current quarter, concern about global demand has led some to predict another contraction that will push Japan back into recession - defined as two straight quarters of economic contraction.

The Bank of Japan stunned global markets in January by adding negative interest rates to its massive asset-buying program as it struggles to reflate the long-moribund economy.

Reporting by Stanley White; Editing by Kim Coghill

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