TOKYO (Reuters) - Japanese manufacturing activity expanded in August at the fastest pace in seven months as domestic orders rose, a survey showed on Friday, suggesting the economy is bouncing back after contracting in the April-June quarter.
The Markit/Nikkei Japan Flash Manufacturing Purchasing Managers Index (PMI) rose to a seasonally adjusted 51.9 in August from a final 51.2 in July.
The index remained above the 50 threshold that separates expansion from contraction for the fourth straight month and showed activity expanded at the fastest pace since January.
The index for new orders rose to a preliminary 53.2 from a final 50.9 in the previous month, also indicating the fastest growth in seven months. This suggests domestic demand is gaining strength.
However, the flash index for new export orders fell to 50.5 from 52.2 in the previous month, suggesting overseas demand is losing momentum as China's economy slows.
The output component of the PMI index also fell to a preliminary 51.9 from a final 52.2 in July.
Japan's gross domestic product contracted an annualised 1.6 percent in April-June as exports slumped and consumers cut back spending.
The economy is expected to resume growing in the current quarter if consumer spending bounces back, but persistent export weakness could temper the strength of the rebound.