Tokyo, Sept. 1 (BNA):  Japan's factory activity shrank in August on decreasing orders from overseas, a private sector survey showed on Monday.

The S&P Global Japan Manufacturing Purchasing Managers' Index (PMI) was at 49.7 in August, which slightly undershot the flash reading of 49.9 but improved from 48.9 in July.

The figure has stayed below the 50.0 threshold, which indicates contraction, for two consecutive months, Reuters reported.

While the pace of factory output contraction slowed and contributed to the headline index's improvement, new orders continued to fall at the same pace as in July, given subdued market conditions, the survey showed.

"Of particular concern was a steeper drop in new export business, which fell at the sharpest pace in nearly a year-and-a-half," said Annabel Fiddes, Economics Associate Director at S&P Global Market Intelligence.

The decrease in new orders from overseas was the fastest since March 2024, and firms referred to weaker demand from key markets such as China, Europe and the United States, according to the survey.

In July, Japanese exports logged the biggest drop in more than four years led by declining car exports to the United States, and industrial production fell more than expected, government data have shown.

Tokyo and Washington struck a trade deal in July to lower U.S. tariffs on Japanese goods in exchange for a U.S.-bound $550 billion Japanese investment package.

M.I, A.A