March 22, 2018 / 1:13 AM / in 10 months

Japan March manufacturing growth cools as orders soften - flash PMI

A worker walks near a factory at the Keihin industrial zone in Kawasaki, Japan, March 8, 2017. REUTERS/Toru Hanai

TOKYO (Reuters) - Japanese manufacturing activity expanded at a slower pace in March than the previous month as growth in new orders and output moderated, in a sign that the economy may be losing a little momentum.

The Flash Markit/Nikkei Japan Manufacturing Purchasing Managers Index (PMI) fell to 53.2 in March on a seasonally adjusted basis from a final 54.1 in February.

The headline reading fell for the second consecutive month, but remained above the 50 threshold that separates contraction from expansion for the 19th executive month.

“Despite two months of weaker headline PMI readings, the 2018 Q1 average still signals a robust operating environment,” said Joe Hayes, economist at IHS Markit, which compiles the survey.

The index for new orders fell to a preliminary 53.2 from a final 54.7 in the previous month, but still pointed to solid demand.

The flash index for new export orders declined to 52.5 from a final 54.1 in February.

The survey also showed Japanese manufacturers continued to face hefty increases in input prices, but were able to pass additional costs to their customers more quickly, suggesting that companies are confident in the outlook for demand, Hayes said.

Japan’s economy has expanded for eight consecutive quarters, the longest uninterrupted growth streak since a 12-quarter run of growth between April-June 1986 and January-March 1989 during its bubble economy.

Some economists have warned that the pace of growth could moderate this year because consumer spending may lose some momentum.

Reporting by Stanley White; Editing by Kim Coghill

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