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Japan's manufacturing PMI growth slows to 9-month low in May

Japan's manufacturing sector expanded at its weakest pace in nine months in May as new order growth slowed amid higher input prices, flash estimates from IHS Markit and Nikkei showed.

The Markit/Nikkei Japan Manufacturing Purchasing Managers' Index, or PMI, slipped to 52.5 in May from 53.8 in April. A reading above 50 points to expansion.

"Despite the promising upturn in April data, May's flash release erred on the side of disappointment," said Joe Hayes, an economist at IHS Markit.

New order growth weakened to a nine-month low, although new export orders rose at a faster rate in May amid the recent dollar strength against the yen, up about 2% over April as of 10:00 p.m. ET on May 22.

Hayes noted that employment growth eased, in line with a weaker buildup of work backlogs due to softer demand pressures.

"However, there was further evidence that supply-side constraints may be impacting output potential," Hayes added, citing material shortages as contributing to the longest delivery times in seven years. As a result, input prices rose at the fastest pace in 52 months, he said.

Manufacturers continued to hold positive future expectations in May, but optimism waned.