TOKYO -- Japan's manufacturing activity barely expanded in January and eased to a 29-month low amid a sharp deterioration in international demand, a survey showed Friday.
The Nikkei Japan Manufacturing Purchasing Managers' Index, or PMI, dropped to 50.3 from 52.6 in December, marking the lowest level since August 2016. Readings above 50 indicate an expansion, while those below 50 indicate a contraction.
Anecdotal evidence points to a downswing at the semiconductor industry. Meanwhile, "domestic markets also showed signs of frailty as total demand declined for the first time since September 2016," said Joe Hayes, economist at IHS Markit, which compiles the survey.
The domestic weakness "further adds to already existing challenges," Hayes said, such as the Sino-U.S. trade tensions and a major tax increase scheduled for later this year.
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