Japan’s manufacturing activity grew in July at the slowest pace in four months in a sign that industry is curbing production due to slowing growth in exports.

The Markit/JMMA Japan Manufacturing Purchasing Managers Index fell to a seasonally adjusted 50.7 in July from 52.3 in June.

The index remained above the 50 threshold that separates expansion from contraction for a fifth consecutive month, but showed that growth had slowed to the lowest level since March.

"After a promising second quarter, Japan's manufacturing expansion slowed in July," Claudia Tillbrooke, an economist at Markit, told Reuters. "The decelerating growth of output and new orders, combined with falling employment, painted a less encouraging picture than that indicated by previous surveys."

The index for new export orders fell to 51.1 from 52.1 in the previous month.

The output component of the PMI index also fell in July to 50.8 from 52.7 in June to mark the slowest growth in five months.

Data on Tuesday showed Japan's industrial output fell at the fastest pace in more than two years in June, a seasonally adjusted 3.3 percent, as companies curbed production to avoid a buildup in inventories, but an improving labor market suggested a gradual improvement in the economy.

The Japanese yen traded slightly firmer after the report, MarketWatch reported, with the dollar slipping to ¥98.05 from ¥98.10 just before the release.