TOKYO -- The Nikkei Japan Manufacturing Purchasing Managers' Index, or PMI, rose to 54.0 in December, highest since February 2014, from 53.6 in November.
A reading above 50 signals an improvement, while one below 50 points to a contraction in activity. The index in November signaled the strongest improvement in manufacturing sector conditions since March 2014.
"Output growth accelerated for a fifth month in succession, while new business opportunities, both domestic and foreign, rose sharply," said Joe Hayes, economist at IHS Markit, which compiles the survey.
"Firms took advantage of the robust demand backdrop and raised selling prices for a twelfth month in a row... This will provide encouragement that the aggressive monetary easing Bank of Japan policymakers have pursued is being effectively transmitted into the economy," Hayes added.
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