Japanese manufacturing activity declined again in June, a private survey showed on Friday as companies saw new orders fall at their fastest pace in more than three years.
The latest Nikkei-Markit flash manufacturing purchasing managers index was down three months from 49.5, down from 49.8 in May. Any value below 50 indicates that Japan's manufacturing sector is shrinking.
The country's manufacturers indicated that new orders fell at the fastest pace since June 2016, amid heightened global trade tensions, while reporting more flexible export orders, backlogs and production prices.
The survey provides an early reading on the health of Japanese industry and is published before the official PMI measure, based on 85% to 90% of survey respondents.
"Lower demand in domestic and international markets has contributed to the sharp drop in total new orders for three years," said Tim Moore, associate director of IHS Markit. "A weak spot for automotive demand and moderate customer confidence in the wake of trade frictions between the US and China were often cited by survey respondents."
While Japan has defied expectations of slowing growth in the first quarter, the world's third-largest economy has faced unfavorable winds. The country was caught in the crossfire of the trade war between the US and China, which raised tariffs on billions of dollars worth of each other's goods. This has caused a recent drop in Japanese exports.
Meanwhile, Japan's central bank kept its policy unchanged on Thursday, despite inflation falling short of its 2 percent target and US Federal Reserve dovish signaling this week.