TOKYO—Painting a dismal picture of the outlook for the world's third-largest economy, weak industrial production figures release by Japan suggest an overseas slowdown may be choking the nation's exports.
Data from the Ministry of Economy, Trade and Industry showed Friday that industrial output unexpectedly fell 1.2% in July from a month earlier.
The decrease, adjusted for seasonal factors, was less than a 1.8% rise predicted by economists surveyed by Dow Jones Newswires and the Nikkei.The result follows a 0.4% revised increase in June.
A survey of manufacturers released with the data showed that companies expect output to rise 0.1% in August from the previous month before decreasing 3.3% in September. Despite the negative readings, the ministry maintained its view that industrial output is "flat."
An official briefing reporters on the data said that the result was due to a sharp drop in production of electronic components shipped to Asian cellphone factories. The official also cited a fall in domestic demand for flat-panel TVs.
Analysts said the numbers were negative for the recovering Japanese economy.
Tatsushi Shikano, senior economist at Mitsubishi UFJ Morgan Stanley Securities, said the result was much weaker than expected, particularly the outlook figures.
"It was originally assumed that the weakness in April-May would be temporary and followed by a rebound in summer. But such a scenario clearly fell through," Mr. Shikano said.
Output fell 0.2% on-month in April and 3.4% in May. He noted that what's behind the slump is a slowdown in exports, which were weak across the board.
Analysts say one possible silver lining to the decrease is that its possible signal of a slowdown in exports could help to weaken the yen's persistent strength.
"This could indicate that the trade balance won't be recovering for the time being, which could be considered a yen-weakening factor," said Daisuke Karakama, market economist and vice president of forex sales at Mizuho Corporate Bank.
Meanwhile, bearish price data released earlier Friday also presented a gloomy outlook for another aspect of the nation's economy.
The nation-wide consumer price index fell 0.3% in July from a year earlier, likely stoking expectations for additional easing by the Bank of Japan, which has pledged to pursue "powerful" monetary easing as it strives to achieve its 1% near-term inflation goal.
Core CPI for the Tokyo metropolitan area, an early indicator of national price trends, fell 0.5% in August, compared with a 0.6% fall in the previous month.
Economists had predicted a 0.6% drop. The central bank expects core CPI to rise 0.7% in the next fiscal year starting April 2013. BOJ Gov. Masaaki Shirakawa has also said the 1% goal will likely be achieved before long, after the beginning of fiscal 2014.
wsj.com
Data from the Ministry of Economy, Trade and Industry showed Friday that industrial output unexpectedly fell 1.2% in July from a month earlier.
The decrease, adjusted for seasonal factors, was less than a 1.8% rise predicted by economists surveyed by Dow Jones Newswires and the Nikkei.The result follows a 0.4% revised increase in June.
A survey of manufacturers released with the data showed that companies expect output to rise 0.1% in August from the previous month before decreasing 3.3% in September. Despite the negative readings, the ministry maintained its view that industrial output is "flat."
An official briefing reporters on the data said that the result was due to a sharp drop in production of electronic components shipped to Asian cellphone factories. The official also cited a fall in domestic demand for flat-panel TVs.
Analysts said the numbers were negative for the recovering Japanese economy.
Tatsushi Shikano, senior economist at Mitsubishi UFJ Morgan Stanley Securities, said the result was much weaker than expected, particularly the outlook figures.
"It was originally assumed that the weakness in April-May would be temporary and followed by a rebound in summer. But such a scenario clearly fell through," Mr. Shikano said.
Output fell 0.2% on-month in April and 3.4% in May. He noted that what's behind the slump is a slowdown in exports, which were weak across the board.
Analysts say one possible silver lining to the decrease is that its possible signal of a slowdown in exports could help to weaken the yen's persistent strength.
"This could indicate that the trade balance won't be recovering for the time being, which could be considered a yen-weakening factor," said Daisuke Karakama, market economist and vice president of forex sales at Mizuho Corporate Bank.
Meanwhile, bearish price data released earlier Friday also presented a gloomy outlook for another aspect of the nation's economy.
The nation-wide consumer price index fell 0.3% in July from a year earlier, likely stoking expectations for additional easing by the Bank of Japan, which has pledged to pursue "powerful" monetary easing as it strives to achieve its 1% near-term inflation goal.
Core CPI for the Tokyo metropolitan area, an early indicator of national price trends, fell 0.5% in August, compared with a 0.6% fall in the previous month.
Economists had predicted a 0.6% drop. The central bank expects core CPI to rise 0.7% in the next fiscal year starting April 2013. BOJ Gov. Masaaki Shirakawa has also said the 1% goal will likely be achieved before long, after the beginning of fiscal 2014.
wsj.com
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