Japan’s factory output fell for the first time in three months in January, as a global economic slowdown continued to cool demand, weighing on the country’s recovery momentum.
(Bloomberg) — Japan’s factory output fell for the first time in three months in January, as a global economic slowdown continued to cool demand, weighing on the country’s recovery momentum.
Industrial production shrank 4.6% from December, according to the industry ministry Tuesday. Economists had forecast a 2.9% decline. The lunar new year holidays across Asia were among the factors weighing on output. Cars, auto parts and chip making machinery led the drop while fuel production rose.
Output decreased 2.3% from a year ago, below analysts’ estimates of a 0.7% slip.
The drop adds to evidence of weakness in Japan’s economy, backing the central bank’s decision to continue with easing for now. Governor nominee Kazuo Ueda, who will take over the Bank of Japan’s helm from April if approved, said that it’s appropriate to maintain monetary easing on Monday, during the second day of his parliamentary hearings.
Read More: What We Learned About Bank of Japan Nominee Ueda From Hearings
Japan’s recent lackluster trade results also highlighted softening demand around the world. Export growth slowed sharply to 3.5% in January from the previous month, reflecting the growing impact from the global slowdown. Many central banks have yet to entirely pivot away from rate hikes, further weighing on business activity.
On a brighter note, separate data showed Japan’s retail sales rose a stronger-than-forecast 1.9% in January from a month earlier, a positive sign that consumption remains resilient despite the hit from rising prices.
What Bloomberg Economics Says…
“Looking ahead, production stands to get boost from demand in China, where growth is rebounding after the government ended its Covid Zero policy.”
— Yuki Masujima, economist
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(Updates with more details from the report)
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