Japan’s Dec factory output inches down, retail sales beat forecasts

JAPANESE factories cut output slightly in December, capping an anaemic final quarter of 2022 for manufacturers hit by stalling global demand and rising costs.

Although retail sales, a barometer of service-sector activity and consumer spending, rose more than expected, the faltering factory activity is ill-timed as companies face calls to hike wages to sustain Japan’s post-pandemic recovery.

Industrial output fell 0.1 per cent in December from the previous month, government data showed on Tuesday. The drop was less than the median market forecast for a 1.2 per cent decrease and followed upwardly-revised 0.2 per cent growth in November.

Output of items such as general machinery and metal products, which dropped 6.0 per cent and 3.0 per cent, respectively, dragged down the overall December index. Output of auto products was up 0.6 per cent, posting first growth in two months.

Manufacturers surveyed by the Ministry of Economy, Trade and Industry (METI) expect output to remain flat in January and increase 4.1 per cent in February, the data also showed, although the official poll tends to report an optimistic outlook.

Compared with the previous quarter, factory output fell 3.1 per cent in October-December, the first drop in two quarters.

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Japan’s economy, after a surprise contraction in July-September, is expected to have expanded by an 3.0 per cent annualised growth in October-December thanks to solid consumption, according to the latest Reuters poll. REUTERS