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Japan’s November plant output falls for the 1st time in 3 months
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JAPAN’S factory output fell for the first time in three months in November and retail sales slumped, suggesting that a clear recovery in the world’s third-largest economy will be delayed until early in 2016.
While manufacturers expect to increase output in coming months, the weak data cast doubt on the Bank of Japan’s view that an expected pickup in exports and consumption will help jump-start growth and accelerate inflation toward its 2 percent target.
Industrial output fell 1 percent in November from the previous month, more than a median market forecast for a 0.6 percent decline, data by the trade ministry showed yesterday.
Separate data showed that retail sales fell 1 percent in November from a year earlier, more than a median forecast for a 0.6 percent drop, as warm weather hurt sales of winter clothing.
“We’re finally seeing signs of pickup in exports, but the economy has yet to make a clear turnaround,” said Takeshi Minami, chief economist at Norinchukin Research Institute.
“There’s a risk consumption will remain sluggish and prevent economic growth from picking up,” he said.
Japan’s economy narrowly dodged recession in the July-September quarter and analysts expect only modest growth in the current quarter, as consumption and exports lack steam.
Some analysts warn the economy may suffer a contraction in the October-December quarter if household spending remains weak. Taro Saito, senior economist at NLI Research Institute, expects consumption in the current quarter to have risen less than a 0.4 percent quarter-on-quarter increase in the July-September period.
Wary of soft growth, the government plans nearly US$800 billion in record spending in the budget for the fiscal year that will begin on April 1.
The BOJ has signaled readiness to expand stimulus if risks threaten Japan’s recovery prospects. The BOJ fine-tuned its stimulus program on December 18 to ensure the central bank can maintain or even accelerate its money-printing.
While sluggish emerging market demand dims the export outlook, analysts expect output to gradually increase early in 2016 as automakers ramp up production of new models.
Manufacturers surveyed by the trade ministry expect to increase production by 0.9 percent in December and raise it by 6 percent in January.
Many analysts share the central bank’s view that output is bottoming out, though some doubt manufacturers will boost production as much as they now project.
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