The au Jibuns Bank purchasing managers index (PMI) for Japan declined in June by 2pc and fell to a seasonally adjusted rate of 51.5 compared to May. The index has gained 28pc in June from the prior year. If the index falls below 50, the manufacturing economy indicates a contraction according to the Japanese bank.
The PMI marks the lowest levels in the four months ending June, driven by slow growth in new orders and massive output cuts for the first time since January, au Jibun Bank noted.
Japan focused mainly on exports amid weak domestic demand due to the restrictions of the COVID-19 outbreak in Tokyo and other economic hubs. Overall exports orders have increased in June but at a much slower pace than the previous month.
In the first quarter too, the Japanese economy shrunk on the back of production cuts at plants and the pandemic still dealt a heavy blow to demand overall in the domestic market.
The service and manufacturing sectors are hopeful of improvement in demand as rapid vaccination drives are helping to ease domestic restrictions.