Japan factory output falls for 3rd month as global demand cools

TOKYO - Japan’s factory output shrank again for a third straight month in November as cooling demand overseas pushed production levels further below pre-pandemic levels. 

Industrial production inched down 0.1 per cent from October, according to the industry ministry on Wednesday. Economists had forecast a 0.2 per cent decline. Output also fell 1.3 per cent from a year ago, compared with analysts’ expectations of a 1.5 per cent drop. 

The continued falls support the Bank of Japan’s view that the

economy’s fragile recovery is still in need of support.

Japanese firms, especially manufacturers, are growing more cautious over the outlook as uncertainty grows over the extent of a global slowdown and the possibility of recessions in key overseas markets. 

Weakening demand from business partners is already visible in trade figures showing the first month-on-month fall in exports from Japan since the supply-chain snarls of last year. 

The figures come after retail sales data released on Tuesday showed an

unexpected fall in consumer spending

even after the first full month of reopened borders to foreign visitors.

Economists said the drop in spending suggests inflation in Japan is starting to weigh on sentiment after the release of pent-up demand from the pandemic.

With demand weakening at home and abroad, Japan’s recovery from an economic contraction over the summer may prove less robust than hoped.

Bloomberg Economics analyst Yuki Masujima said: “We expect a small production recovery in December. China’s Covid-19 policy shift could open the way for an upside surprise in Japan’s performance, particularly in production machinery.” BLOOMBERG