TOKYO (Reuters) - Japanese manufacturing activity rebounded modestly in May as output and new orders picked up, suggesting a much-needed improvement in demand at home and abroad.
The Markit/JMMA flash Japan Manufacturing Purchasing Managers Index (PMI) rose to a seasonally adjusted 50.9 in May from a final 49.9 in April.
The index returned above the 50 threshold that separates contraction from expansion for the first time in two months.
The output index also rose to a preliminary 51.7 in May, after shrinking in April.
New orders rose to a preliminary 51.2 from 48.8 in April, ending two months of declines.
New export orders rose modestly to 50.5 from a final 50.3 in the previous month, but expanded for the 11th consecutive month.
The final Markit/JMMA PMI for May will be released on June 1.
Japan's economy expanded in January-March at the fastest pace in a year, but much of the growth came from inventories, data showed on Wednesday.
Private consumption, housing investment and exports all rose but at a feeble pace, leaving policymakers with more work to do two years after a radical monetary stimulus program has brought only scant success.
The flash PMI data for May would suggest there is a good chance that the economy continued to expand in the current quarter.
Reporting by Stanley White; Editing by Kim Coghill