Japan’s August factory output falls 3.3% month on month
JAPAN’S factory output tumbled in August, driven by typhoon-led disruptions in motor vehicle production and weak US sales, with the government and analysts cautioning about a subdued outlook that raises the hurdle for a solid economic recovery.
Industrial output fell 3.3 per cent in August from the previous month, data released by the Ministry of Economy, Trade and Industry (Meti) on Monday (Sep 30) showed, worse than a median market forecast for a 0.9 per cent drop.
“Taking into account overseas factors, it is difficult to expect a significant increase in production in the near future, and the pace of recovery will remain moderate,” said Shungo Akimoto, a market economist at Mizuho Securities.
Motor vehicles production dropped 10.6 per cent in August compared to a month ago, as Typhoon Shanshan forced a swath of carmakers to suspend operations, a Meti official said.
Carmaker’s certification scandals, which led to the production suspension of three models domestically, also put downward pressure on output.
Weak vehicle sales in the US might have also dented motor vehicle output, said Takeshi Minami, chief economist at Norinchukin Research Institute.
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Although manufacturers surveyed by Meti expect seasonally adjusted output to increase 2.0 per cent in September and expand 6.1 per cent in October, those production forecasts tend to come out stronger than the actual results. The July-September output would be lower than the second quarter even if September output grows as anticipated, a Meti official said.
“The weight on production was gradually being lifted, but there was a strong sense of uncertainty when we thought about whether we could have a bright outlook in the future,” the official said.
Separate data showed Japanese retail sales rose 2.8 per cent in August from a year earlier, above the median market forecast for a 2.3 per cent rise.
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Compared with the previous month, retail sales edged up 0.8 per cent in August, following a 0.2 per cent gain in July, the data showed.
Japan‘s economy expanded an annualised 2.9 per cent in the second quarter as steady wage hikes underpinned consumer spending. Capital expenditure continues to grow, though soft demand in China and slowing US growth cloud the outlook for the export-reliant country. REUTERS
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