TOKYO -- Japan's manufacturing sector contracted in May with both output and new orders falling for fifth successive months, according to a survey.
The Nikkei Japan Manufacturing Purchasing Managers' Index, or PMI, fell from 50.2 in April to 49.8 in May, registering below 50 point-line which separates expansion from contraction.
New orders and output have fallen for five months reflecting the weakness in demand both overseas and domestically. New export business fell for sixth consecutive months.
Amid intensified trade tensions between the U.S. and China, future output expectations turned pessimistic in May for the first time since November 2012.
"Weak demand from Japan's key trade partner, China, as well as signs of an increasingly sluggish domestic economy, have impacted sales volumes," said Joe Hayes, Economist at IHS Markit, which compiles the survey.
Japan expects a sales tax hike in October. "There lies ahead potential banana skins for Japanese firms to avoid." Hayas added, "Businesses cast a downbeat assessment for the year ahead for the first time in six-and-a-half years."
For more information, visit IHS Markit website.