Final data released by IHS Markit showed activity in Japan's manufacturing sector expanded at a slower rate in July as growth in exports falters. The Nikkei Japan Manufacturing purchasing manager's index (PMI) came in at 52.1 last month, compared to a preliminary reading of 52.2 and a final reading of 52.4 in June. That was the lowest reading since November 2016. Economists had expected the reading to stay at 52.2. A reading above 50 signals an expansion in activity, while a reading below this level signals a contraction.

The growth of the Japanese manufacturing sector was sustained at a modest rate during July, supported by further improvement in output, new orders and employment, the report said. However, in each case, rates of expansion were lower than recorded in June, while export trade increased at the weakest pace in nearly a year.

Commenting on the Japanese Manufacturing PMI survey data, Paul Smith, senior economist at IHS Markit, which compiles the survey, said: "The expansion of the Japanese manufacturing sector was undermined somewhat during July by a slump in new export order growth, which led to the lowest rises in both output and new orders since the final few months of last year. However, sentiment reached its highest level in over five years of data collection and, combined with ongoing rises in staffing levels, provides some reassurance that growth should be sustained in the coming months."