Japan’s manufacturing sector decelerated in March but continued to expand, the latest survey from Markit Economics showed on Wednesday, with a PMI score of 50.3.

That’s down from 51.6 in February, although it remains barely above the boom-or-bust line of 50 that separates expansion from contraction.

The March reading also represents a 10-month low score.

“Latest data signaled a weaker improvement of operating conditions in the Japanese manufacturing sector. Manufacturers reduced their workforce numbers for the first time since September 2014 in March, albeit at a fractional rate,” said Markit economist Amy Brownbill.

Manufacturing production growth eased in March, having expanded in February at the quickest pace since before the higher sales tax was implemented in April 2014. The slowdown in output growth was underpinned by a contraction in total new orders in March, marking the end of a nine-month sequence of growth.

PMI data suggested that the recent fall in total new orders was mainly caused by poor domestic market conditions, as new export orders remained in positive growth territory for the ninth successive survey period in March. Several companies mentioned a favorable yen/dollar rate helping to improve price competitiveness.

Lower production requirements and weak demand conditions subsequently led manufacturers to shed workers for the first time since September 2014. Similarly, purchasing activity decreased in March, although at only a fractional pace.

As a consequence of the depreciation of the yen, cost pressures persisted in March, as companies reported steep hikes in imported raw material prices. However, input price inflation eased to the slowest rate since July 2013.

“New orders from abroad increased, with panellists mentioning a favourable yen/dollar rate helping to improve price competitiveness. However, cost pressures persisted, as purchasing prices rose amid reports of steep hikes in imported raw material costs,” Brownbill said.

The material has been provided by InstaForex Company – www.instaforex.com