Japan's manufacturing sector maintained robust growth in June, with new orders expanding at their quickest rate in over four years despite escalating cost pressures stemming from conflict in Iran, a survey released on Tuesday showed.

The preliminary au Jibun Bank Japan Manufacturing Purchasing Managers' Index (PMI) for June rose slightly to 54.9 from a final reading of 54.5 in May, moving back towards the 55.1 recorded in April, which was the strongest pace of expansion since January 2022. A PMI reading above 50.0 indicates growth in business activity, while a figure below 50.0 signals contraction.

The rate of increase in factory output accelerated marginally, while the growth in new orders reached its fastest pace in more than four years. The survey indicated this was partly due to clients building inventory over concerns that the conflict in Iran could lead to supply disruptions and future price hikes.

The pace of growth in new export orders moderated slightly compared to May, which had seen the fastest increase in five years.