Japan factory output drops on hit from global slowdown
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Japan’s manufacturing output declined for the first time in three months in April amid a global slowdown.
PHOTO: REUTERS
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TOKYO - Japan’s factory output unexpectedly declined for the first time in three months in April amid a global slowdown, in a weak start to the country’s second quarter.
Industrial production fell 0.4 per cent from the previous month after two consecutive months of increases, according to the Industry Ministry on Wednesday.
Economists had forecast a 1.4 per cent rise. Factory machinery, metal products and automakers’ output dragged on the overall figures.
The latest 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, especially in the first quarter.
“It was unexpectedly weak,” said Mr Kota Suzuki, an economist at Daiwa Securities. “The output for production machinery, electronic components and devices was considerably lower than forecast. It reflects weakness in global demand for goods, particularly in the United States and Europe. China is not doing so well either.”
A separate ministry report showed that retail sales also 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.
There are also several risks looming over the Japanese economy. The US economic and financial situation remains a source of concern.
“The main scenario is a natural global slowdown” going ahead, said Mr Suzuki. “It’s inevitable given that the effect of rate hikes will hit this year with a lag.”
China’s economy also does not appear as strong as initially expected. Japan’s exports to its neighbouring country have been falling for five months, indicating that China’s recovery is losing momentum after an initial burst in consumer and business activity earlier in the year.
The banking turmoil in the United States 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.
Washington is likely to avoid a default as President Joe Biden and House Speaker Kevin McCarthy reached a tentative debt-ceiling deal last weekend.
But this has already caused disruption and confusion in the global markets, and traders remain somewhat cautious about the agreement. BLOOMBERG
