Japanese manufacturing activity falls first time in five months

Japanese manufacturing activity fell in June for the first time in five months, offering further evidence that factory output would probably moderate in the coming months.

The Nomura/JMMA Japan Manufacturing Purchasing Managers Index (PMI) also showed that new export orders, a leading indicator of Japanese exports, were down for the second straight month in June.

Japanese industrial production growth could slow in the second half of the year as a rapid recovery in exports starts moderating with the global restocking of inventories running its course, economists say.

Chances of Japanese factory output growing at a slower pace are also projected due to decline in shipments and a rise in inventories by economists.

Japan's PMI index was down to a seasonally adjusted 53.9 in June from 54.7 the previous month, which was the highest in almost four years, according to a survey.

The index fell for the first time in five months but remained above the 50 threshold for a 12th straight month. The threshold separates contraction from expansion.