Japan’s factory output growth slumps in April, dims production prospects

TOKYO: Japan’s industrial output was wel l short of market expectations in April, official figures showed on Thursday, adding to fears for the out look after the economy contracted in the first quarter.

Industrial output rose just 0.3 per cent in April from the previous month, official data showed on Thursday, well below the median forecast for a 1.2 percent increase and a 1.4 per cent rise in March.

Much of the slowdown was due to a 5.6 per cent decline in production of electronic parts while inventories rose for a third straight month, adding to fears of weakening overseas demand.

Output is seen likely to weaken fur ther as companies focus on lowering inventories of unsold goods, suggesting Japan’s economic performance peaked last year and this year growth will be more modest.

“Production is slowing overall because companies with high inventories are cutting their output,” said Asuka Sakamoto, economist at Mizuho Research Institute.

“Output will fall in the coming months, but I expect consumer spending to rebound in the second quarter, which should be supportive for economic growth.

“I’m not worried about a recession.”

Manufacturers surveyed by the Ministry of Economy, Trade and Industry expected output to rise 0.3 per cent in May but to fall 0.8 per cent in June. — Reuters