TOKYO: Japan’s manufacturing activity expanded at the slowest pace in three months in May, as supply bottlenecks due to parts shortages and China’s COVID-19 lockdowns caused output and new orders growth to slow.

Activity in the services sector improved on stronger domestic demand due to the fading impact of the pandemic, though service-sector firms faced a drag from the sharpest rise in input prices on record. New overseas orders shrank at the fastest pace since July 2020 in a sign of cooling demand from China.