Japan factory output slumps as economy sinks deeper into recession

Employees work on the automobile assembly line at the Kawasaki factory of Mitsubishi Fuso Truck and Bus Corp, on May 18, 2020.
Employees work on the automobile assembly line at the Kawasaki factory of Mitsubishi Fuso Truck and Bus Corp, on May 18, 2020.PHOTO: REUTERS

TOKYO (REUTERS) - Japan's industrial output fell for a fourth straight month in May to the lowest level since the global financial crisis, highlighting the widespread impact of the coronavirus on factory and overall business and consumer activity.

The world's third-largest economy is bracing for its worst post-war recession, hurt by coronavirus lockdown measures at home and overseas that have upended supply chains, kept businesses shut and depressed consumer spending.

Ministry of Economy, Trade and Industry data out on Tuesday (June 30) showed that factory output fell 8.4 per cent month on month in May to 79.1, a level not seen since March 2009 when the financial crisis sapped global demand.

The slump followed a 9.8 per cent decline in the previous month, and was much bigger than the median market forecast of a 5.6 per cent drop in a Reuters poll of economists.

Manufacturers surveyed by the Ministry of Economy, Trade and Industry (METI) expect output to rise 5.7 per cent in June and 9.2 per cent in July, the data showed.

The government left its assessment of industrial production unchanged to say it was "lowering sharply", the bleakest official view since the global financial crisis in late 2008.

Japan's economy shrank an annualised 2.2 per cent in January-March, slipping into recession for the first time in four and a half years, and analysts expect the health crisis to have driven a deeper slump in the current quarter.