TOKYO • Japan's industrial output unexpectedly fell in January for the first time in six months, pressured by a slow down in shipments of cars to the United States in a sign of an economy grappling for a more sure-footed recovery.

While Asian exports, including Japanese sales, have started to recover from late last year, the jury is still out on whether the uptick is sustainable in the wake of rising protectionism in the US.

Data by the Ministry of Economy, Trade and Industry yesterday showed industrial output fell 0.8 per cent in January. It was the sharpest month-on-month decline since May last year, and the outlook allowed for little cheer as manufacturers surveyed by the ministry tipped output to rise 3.5 per cent last month and then decrease by a bigger 5.0 per cent rate this month.

"Factory output will probably slow down this quarter as a reaction to solid production in October-December," said senior economist Hidenobu Tokuda at Mizuho Research Institute.

"Still, output is likely to remain in a moderate pick-up, backed by IT-related demand for smartphones in China and economic recovery in the US and Europe, as well as resource-exporting countries and emerging markets, although uncertainty remains over the outlook on US economic policies."

Separate data by the ministry showed that Japanese retail sales rose 1 per cent in January on the year, versus expectations for a 0.9 per cent gain. That was the third straight month of annual gains, indicating a gradual pick-up in consumer spending. Japan's economy grew an annualised 1 per cent in October-December, slowing from 1.4 per cent in the third quarter.

Faced with a slow recovery and tepid consumer prices, the Bank of Japan revamped its policy framework last September to one better suited for a long-term battle with deflation, after three years of aggressive asset purchases failed to accelerate inflation to 2 per cent.

The ministry maintained its assessment on industrial output, saying that production was picking up. But that view had to be squared off by evidence showing that momentum in the economy remained soft, underscoring a fragile recovery and an uncertain outlook. The worry for Japan is the uncertainty over the economic policies of US President Donald Trump, whose repeated pledges to pull back from free trade have raised concerns that protectionism will spread.

REUTERS