The final Markit/Nikkei manufacturing Purchasing Managers' Index (PMI) for Japan increased to 51.7 in August from 51.2 in July, down from the preliminary reading of 51.9.

A reading below 50 indicates contraction of activity.

The index was driven by an improvement in operating conditions and by a rise new orders, output and employment.

"Operating conditions in the Japanese manufacturing sector improved noticeably in the latest survey period, with new order growth accelerating to a seven-month high. This was also supported by increases in both production and employment," economist at Markit, Amy Brownbill, said.