Japan factory output down in red flag for economy


TOKYO: Japan’s factory output unexpectedly slipped 0.8 percent in January, the first fall in six months and the latest red flag for the world’s number-three economy, official data showed Tuesday.

The on-month figure, which missed market expectations for a 0.4 percent expansion, comes a week after Japan logged its first trade deficit in almost half a year.

A weak yen has helped prop up the economy by driving exports, but inflation and consumer spending remain weak as cautious firms avoid big pay hikes.

“This is a reminder to be cautious for those who have been upbeat on Japan’s economy,” Taro Saito, director of economic research at the NLI Research Institute, told Bloomberg News.

Production of electronics parts and devices expanded in January, lifted by strong demand for smartphones and other gadgets, the government said Tuesday. But that was offset by a decline in passenger vehicle production.

The data dampen hopes for Japanese Prime Minister Shinzo Abe’s efforts to produce meaningful growth with a policy blitz, dubbed Abenomics.

The plan—a mix of aggressive monetary easing and huge government spending along with reforms to the economy—stoked a stock market rally and fattened corporate profits, but the effect on the wider economy has been less dramatic.

While Japan’s job market is tight, individual spending—which accounts for more than a half of the country’s GDP—has remained in the deep freeze.

The Bank of Japan (BoJ), aiming to create two-percent inflation to achieve sustainable growth, now expects to reach that goal by March 2019—four years later than planned.

Government and central bank officials have blamed external factors, such as falling energy prices and uncertainty related to emerging economies, for that failure.


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