Japan's Dec factory output extends declines as recovery stalls

[TOKYO] Japan's industrial output extended declines in December as factories struggled with a hit to demand from expanded Covid-19 lockdown measures globally, suggesting the economic recovery was teetering.

The output slowdown may fan worries that the world's third-largest economy will see a double-dip recession as businesses are pressured by a wider, local state of emergency covering parts of the country, including Tokyo.

Separate data showed the average number of available jobs per applicant for 2020 saw its biggest decline in 45 years, while the December jobless rate held steady from the previous month.

Official data released on Friday showed factory output declined 1.6 per cent in December, as falling production of general machinery and cars offset strength in inorganic and organic chemicals manufacturing.

The decline was larger than the previous month's 0.5 per cent fall, but largely in line with a 1.5 per cent decline in a Reuters poll of economists.

"The renewed fall in industrial output in December means that the sector is entering 2021 on the backfoot," said Marcel Thieliant, senior Japan economist at Capital Economics.

"But firms' production forecasts suggest that weakness won't last: manufacturers expect output to surge by 8.9 per cent month-on-month in January."

Manufacturers surveyed by the Ministry of Economy, Trade and Industry (METI) expected output to rebound 8.9 per cent in January and decline 0.3 per cent in February.

The government kept its assessment of industrial production unchanged, saying it was picking up.

Factory output weakened in November as a rebound in car production ended on sagging global demand.

Some analysts worry that will derail Japan's economic recovery and raise the risk of a new recession.

The government also released data on Friday showing that the country's seasonally adjusted jobless rate held steady at 2.9 per cent in December, beating the median estimate of 3.0 per cent.

Other data showed the average jobs-to-applicants ratio for 2020 was 1.18, down 0.42 point from 2019 to post its biggest annual fall since 1975. The ratio was unchanged at 1.06 in December from the previous month.

REUTERS