Japan factory output suffers first fall in 4 months

[TOKYO] Japan's factory output fell in January for the first time in four months, official data showed Wednesday, but the government and experts said industrial momentum remained strong in the world's third-largest economy.

Factory output dropped 6.6 per cent month-on-month, according to industry ministry data, worse than the 4.0-per cent fall that analysts surveyed by Bloomberg News had expected.

However, the ministry said the volatile indicator will likely rebound strongly in February, predicting a surge of 9.0 per cent.

The latest data comes as Japan has notched up eight straight quarters of economic growth - the longest positive run since the "bubble" boom days of the late 1980s.

And Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute, warned against reading too much into January's drop.

"As the figure for December was extremely high and the February figure is also expected to be very high, it's hard to say anything by looking at the January figure only," he told AFP.

On average, "the trend of rising industrial production remains unchanged", he said.

"There is no negative factor for the economy seen right now," he said, adding: "Overseas economies remain robust and domestic demand is sound, while corporate capital investment is rather strong."

Japan's government and central bank are hoping for a "virtuous cycle", with an export-led recovery boosting jobs and household income and thereby domestic demand, which accounts for roughly 60 per cent of Japan's economy.

However, the former economic powerhouse is still battling deflation fears, failing to achieve the 2.0-per cent inflation rate target set by the central bank, which is thought crucial to boosting the economy.

AFP