The headline PMI fell to 49.4 in April from 53.9 in March.
This was the first sub-50 reading in 14 months, and any reading below 50 signals contraction.
"As was expected, the implementation of the increase in the sales tax negatively impacted on Japanese manufacturing companies," noted Markit's Amy Brownbill. "Output and new orders both fell for the first time in 14 months. In both cases, Japanese manufacturing companies linked the reductions to the increase in the sales tax."
On the plus side, the labor market seems to be in good order.
"That said, payroll numbers increased at a faster rate than in March and growth in employment was the sharpest seen since February 2007," said Brownbill. "Therefore, it will be interesting to see whether the increase in the sales tax will continue to have a negative impact on Japanese manufacturing activity in the future months or whether the effects will only be short lived."