Final data released by IHS Markit revealed that activity growth in Japan’s manufacturing sector continued to expand in January, albeit at a slower pace.

The Nikkei Japan Manufacturing purchasing manager's index (PMI) came in at 50.3 last month, compared to a preliminary reading of 50.0 and a final reading of 52.6 in December 2018. That was the lowest reading since August 2016. Economists had expected the reading to remain unrevised at 50.0. 

A reading above 50 signals an expansion in activity, while a reading below this level signals a contraction. 

According to the report, the PMI was pulled down by coincident declines in both output and new orders for the first time in two-and-a-half years. Job creation in Japan’s manufacturing sector was nonetheless sustained during January as firms sought reinforcements to support growth. Business confidence fell for the eighth straight month. 

On the price front, higher transportation, energy and material costs contributed to another monthly rise in purchasing prices. However, the rate of inflation was the slowest since December 2017. Nonetheless, output charges were raised to a stronger degree.