TOKYO (Reuters) - Japan's factory activity was subdued in September as output and new orders contracted due to a weak economy and lacklustre overseas demand, a private-sector survey showed on Tuesday.
The final au Jibun Bank Japan manufacturing purchasing managers' index (PMI) dipped to 49.7 in September from 49.8 in August, but edged up from 49.6 reported in the flash reading.
It remained just below the 50.0 threshold that separates growth from contraction for the third straight month.
The survey showed "muted trends across the manufacturing industry," said Usamah Bhatti at S&P Global Market Intelligence.
The subindex of output shrank slightly in September on a lack of new business.
New orders shrank for the month, having stayed in contractionary territory since June 2023. Firms said a stagnant economy, inventory adjustments and labour shortages were the main factors for the weakness in new orders, the survey showed.
Weak sales in the U.S. and China have kept the subindex of new export orders in decline since March 2022.
Employment in the manufacturing sector rose for the seventh straight month in September, but at the slowest pace in that streak.
Higher costs of raw materials, labour and logistics continued to be a burden for manufacturers although inflation hit a five-month low.
Firms partially passed these higher costs to clients by raising output charges although the pace of increase was the slowest since June 2021.
Manufacturers' outlook for production stayed upbeat, reflecting expectations that demand and mass production of new products would succeed, though confidence was the lowest since December 2022. Companies also hoped for a recovery in the semiconductor and automobile sectors.
Data on Monday showed Japan's factory output tumbled in August, due to typhoon-led disruptions in motor vehicle production and weak U.S. sales.