Japan factory output down, economy hit

tokyo — Japan’s industrial output unexpectedly fell in January for the first time in six months, pressured by a slowdown in shipments of cars to the US in a sign of an economy grappling for a more sure-footed recovery.

While Asian exports, including Japanese sales, have started to recover from late last year, the jury is still out on whether the uptick is sustainable in the wake of rising protectionism in the US.

Data by the Ministry of Economy, Trade and Industry on Tuesday showed industrial output fell 0.8 per cent in January, versus a median market forecast for a 0.3 per cent increase and a revised 0.7 per cent gain the previous month.

It was the sharpest month-onmonth decline since May 2016, and the outlook allowed for little cheer as manufacturers surveyed by the ministry tipped output to rise 3.5 per cent in February and then decrease by a bigger five per cent rate in March.

“Factory output will probably slow down this quarter as a reaction to solid production in October-December,” said Hidenobu Tokuda, senior economist at Mizuho Research Institute.

“Still, output is likely to remain in a moderate pickup backed by IT-related demand for smart phones in China and economic recovery in the United States and Europe as well as resource-exporting countries and emerging markets, although uncertainty remains over the outlook on US economic policies.”

Separate data by the ministry showed Japanese retail sales rose one per cent in January onyear, versus expectations for a 0.9 per cent gain.

That was the third straight month of annual gains, indicating a gradual pickup in consumer spending. Japan’s economy grew an annualised 1.0 per cent in October-December, slowing from 1.4 per cent in the third quarter.