Japanese factory output increases but economy still fragile

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  • Asian Market
  • 9 months ago
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Japan's factory output expanded for the first time in four months in February, though the rebound was relatively weak and the overall outlook for the sector and businesses suggested a record post-war economic growth phase may be coming to an end.

The increasing pressure on the economy was further underlined by a weak outcome for retail sales, meaning Japan's recovery is showing signs of falling prey to both slackening domestic and external demand.

According to data by the Ministry of Economy, Trade and Industry (METI) it showed factory output rose 1.4 percent, topping a 1.0% increase however, it barely recouped a revised 3.4% slump seen in January.

Other data showed retail sales, a key gauge of private consumption that makes up about 60% of the economy, rose just 0.4%, below a 1.2% gain seen by economists and slowing from January.

Manufacturers surveyed by the ministry expect production to rise 1.3% in March and 1.1% in April.

Tha being said, should the forecasts came to fruitiond, the first-quarter production would undershoot the previous three months, officials said, describing the rebound as "not strong enough".

The METI's data follows a recent series of weak indicators, including exports and a leading gauge of capital expenditure, raising the risk of a sharp downturn for the world's third-largest economy.

The mounting pressure on the economy from weak external demand has put a dent on exports and threatens corporate profits, which could weigh on wages and blunt households of their purchasing power, analysts say.

METI described industrial output as "stalling", keeping its assessment unchanged from the previous month.

The trade war between Washington and Beijing has also had a negative effect on domestic growth, as a slowing Chinese economy curbed demand for mobile phone parts and chip-making equipment from Japan, along with uncertainty surrounding Britain's exit from the EU and shaky global financial markets have added to a growing list of worries for policymakers.

The Japanese government shlashed its assessment on the economy for the first time in three years, and the Bank of Japan reduced its view on exports and factory output, although both stuck to the view that the economy remained in moderate recovery.



Source: Smart Trend Team