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Jan output -4.6% m/m vs forecast -2.6%
*
Manufacturers see Feb output +8.0%, Mar +0.7%
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Jan retail sales +6.3% y/y vs f'cast +4.0%
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Retail sales +1.9% m/m
(Adds graphics; no change to text)
By Kantaro Komiya
TOKYO, Feb 28 (Reuters) - Japan's factory output shrank
at the fastest pace in eight months in January as declining
overseas demand took a heavy toll on key industries such as auto
and semiconductor equipment.
In contrast, retail sales posted their fastest growth in
nearly two years, separate data showed, highlighting the
divergent paths between soft manufacturing and robust
service-sector activity.
"Weak export-bound production and a recovery in consumption
continue to be the two main focuses of Japan's economy," said
Atsushi Takeda, chief economist at Itochu Economic Research
Institute. He expects the new Bank of Japan leadership will be
slow to tweak monetary policy amid the uncertainty.
Factory output fell 4.6% in January from a month earlier on
a seasonally adjusted basis, government data showed on Tuesday.
The contraction was much larger than economists' median forecast
of a 2.6% decline and followed an upwardly revised 0.3% increase
in December.
It marked the fastest decrease since May 2022's 7.5% fall,
when China's COVID-19 lockdown disrupted Japanese manufacturers'
supply chains.
Output of auto products slumped 10.1%, dragging the overall
index lower while manufacturing of items such as production
machinery and electronic parts dropped 13.5% and 4.2%,
respectively.
Semiconductor-making equipment was down 26.8% as chip firms
slowed their capital expenditure, while passenger cars fell 7.4%
due in part to component supply bottleneck caused by heavy snow
across Japan, a Ministry of Economy, Trade and Industry (METI)
official told reporters.
The United States-led export control of chip equipment
against China "has not had an immediate effect" on Japanese
industrial production in January, the official added.
"The magnitude of the slowdown was partly due to the
early start to the Lunar New Year this year, which started just
22 days after the turn of the calendar year," said Darren Tay,
Japan economist at Capital Economics, adding production will
rebound in February.
Manufacturers surveyed by METI expect output to rise 8.0% in
February and gain 0.7% in March, the data also showed, although
the official poll tends to report an optimistic outlook.
Separate data showed Japanese retail sales rose 6.3% in
January from a year earlier, beating a median market forecast
for a 4.0% gain and posting an eleventh consecutive month of
expansion. It also logged the fastest growth since May 2021.
Despite the production cuts, retail sales of autos rose
19.3% year-on-year, suggesting strong pent-up demand among
domestic consumers caused by delivery delays.
Compared with the previous month, retail sales expanded 1.9%
in January, following a 1.1% rise in December, the data showed.
Japan's economy, the world's third-largest, is expected to
post an annualised 1.4% expansion in January-March according to
a Reuters poll, after weaker-than-expected 0.6% growth in the
final quarter of 2022.
Kazuo Ueda, an academic nominated to become the Bank of
Japan's next governor from April, has stressed the need to
maintain the current ultra-low interest rates to support the
fragile economy, while signalling the chance of tweaking the
central bank's long-term yield control scheme.
"As Ueda has said, Japan won't be able to escape deflation
until the economic recovery is achieved," said Itochu's Takeda.
"So he wouldn't hurry policy tweaks that could give a strong
shock to the economy, such as a sharp rise in interest rates."
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Japan's factory output posts biggest fall in 8 months ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Reporting by Kantaro Komiya; Graphics by Pasit
Kongkunakornkul; Editing by Shri Navaratnam and Sam Holmes)
