JAPANESE manufacturing activity contracted slightly in June as new orders fell and output growth slowed in a sign the economy may have lost some momentum.

    The Markit/JMMA flash Japan Manufacturing Purchasing Managers Index (PMI) fell to a seasonally adjusted 49.9 in June from a final 50.9 in May.

    The index slid below the 50 threshold that separates contraction from expansion for the first time in a month.

    The output index fell to a preliminary 50.5 in June, following 51.9 in the previous month.

    New orders fell to a preliminary 49.4 from 50.9 in May, also indicating the first decline in a month.

    But new export orders rose to 53.6 from a final 50.6 in the previous month. That marked the fastest expansion in four months, suggesting overseas demand is starting to gather strength.

    The final Markit/JMMA PMI for June is due July 1.

    The decline in the overall PMI index and the output index would be in line with economists’ expectations that GDP growth slowed sharply in the second quarter.

    Japan’s economy is expected to have expanded an annualized 1.3 percent in April-June, much less than 3.9 percent annualized growth in the previous quarter, as companies trimmed output to focus on lowering inventories.

    Many economists say this slowdown should be temporary as consumer spending, exports and capital expenditure are showing signs of driving future growth. (SD-Agencies)