Japan’s factory output drops on hit from global slowdown

JAPAN’S factory output declined for the first time in three months in April amid a global slowdown, likely weighing on the country’s recovering economy.

Industrial production fell 0.4% from the previous month after two consecutive months of increases, according to the industry ministry on Wednesday (May 31). Economists had forecast a 1.4% rise. Production machinery, metal work and automakers’ output dragged on the overall figures.

Wednesday’s results likely reflected impact from the global slowdown, overshadowing the positive effects from improving supply chains. The weakness in domestic production is a potential drag for the Japanese economy, which has recently shown some signs of recovery.

A separate industry ministry report showed that retail sales fell for the first time in five months in April from the previous month, contrary to earlier data that indicated an upbeat consumption trend. It still remains far above year earlier levels.

In addition to concerns about the global slowdown, there are several risks looming over the Japanese economy. The US economic and financial situation in particular will continue to bring uncertainty.

The banking turmoil in the US and Europe, including the collapse of Silicon Valley Bank, has entered a lull for now, but it remains unclear whether it has been completely contained or whether it could flare up again. BLOOMBERG