Japan's factory output sees modest rise; unemployment stays at record low

Japan's factory output for February rose 1.4 per cent month-on-month after a 3.4 per cent dip in January.
Japan's factory output for February rose 1.4 per cent month-on-month after a 3.4 per cent dip in January.PHOTO: REUTERS

TOKYO (AFP) - Japan's closely watched factory output rose modestly in February with unemployment staying at record low levels, official data showed on Friday (March 29), underscoring the patchy recovery of the world's third largest economy.

Factory output for February rose 1.4 per cent month-on-month after a 3.4 per cent dip in January, the trade and industry ministry said on Friday.

The reading compares with market expectations of a 1.0 per cent rise.

"The recovery in output is not strong, reflecting weak exports," Taro Saito, senior economist at NLI Research Institute, told AFP.

Industrial production was particularly weak in electronic parts and devices, "because these products are for exports to China" and have been affected by a Chinese economic slowdown, he added.

The ministry said Japan's factory output is "pausing" on the whole, but forecast a rise in March and April.

But Saito said the pace of any rise "is likely to still be weak and can even be interpreted as flat, so we will be carefully watching more economic indicators ahead" to see whether the economy is on the verge of a downturn.

Meanwhile, the country's jobless rate fell to 2.3 per cent from 2.5 per cent the previous month, its lowest level since 1993, the internal affairs ministry said, as the country's job market remains tight against the backdrop of an ageing population.

The jobs-to-applicants ratio is 1.63, with 163 job offers going for every 100 job hunters, separate data from the labour ministry said.

The latest data came after Japan's economy grew 0.5 per cent quarter-on-quarter in the last quarter of 2018, suggesting a mild turnaround after eight consecutive quarters of growth ended in January-March last year.

But the cabinet office has recently revised down its judgement on the economy, as a leading business confidence index declined in January for the third straight month.

It assessed the latest index as "signalling a possible turning point" towards a downturn, the cabinet office has said.

Analysts have also warned that US-led trade wars could be a major risk factor for an economy still struggling to win a long battle against deflation.