Japan's factory activity growth picks up, costs rapidly rise -PMI

TOKYO (Reuters) - Japan's factory output growth picked up in July due to a stronger expansion of output and new orders, as manufacturers benefited from a continuing recovery of the coronavirus pandemic-hit global economy.

The final au Jibun Bank Japan Manufacturing Purchasing Managers' Index (PMI) in July rose to 53.0 on a seasonally adjusted basis from 52.4 in the previous month.

That compared with a 52.2 flash reading released last month.

"The Japanese manufacturing sector continued to see an improvement in operating conditions at the start of the third quarter," said Usamah Bhatti, economist at IHS Markit, which compiles the survey.

The PMI survey showed that overall output and new orders rose at a faster pace due to strong output in the electronics and auto sectors and solid demand for semiconductors. Firms' expectations for the year ahead remained firm.

Manufacturers, however, struggled with material shortages and logistical disruptions stemming from higher costs as input prices rose at the fastest pace since September 2008.

"Supply chain disruption continued to impact activity within the sector, with firms recording the second-greatest deterioration in lead times in over a decade," Bhatti said.

The world's third-largest economy is likely to grow at a slower pace than initially expected in both the second and third quarters, as coronavirus emergency curbs in Tokyo and some other areas are weighing on consumption, a Reuters poll found https://www.reuters.com/business/japans-q3-growth-forecast-cut-new-pandemic-curbs-hit-2021-07-14 last month.

(Reporting by Daniel Leussink; Editing by Sam Holmes)