Monitoring Desk
ISLAMABAD/TOKYO: Japan’s factory output shrank at a speedy pace in eight months in January as decreasing overseas demand took a heavy toll on significant industries such as semiconductors and auto equipment.
In contrast, a separate figure showed that retail sales rapidly grew in nearly two years, highlighting the divergent paths between soft manufacturing and robust service-sector activity.
“Weak export-bound production and the recovery in consumption continue to be the two major focuses of Japan’s economy,” said the chief economist at Itochu Economic Research Institute, Atsushi Takeda. He expects that the new Bank of Japan leadership would be slow to tweak monetary policy amid the uncertainty.
Factory output cut down
Factory output cut down 4.6 per cent in January 2023 from a month earlier on a seasonally adjusted basis, and government figures showed on Tuesday. The contraction was larger than economists’ median forecast of a 2.6 percent reduction and followed an upwardly revised 0.3 percent rise in December.
It marked the fastest decline since May 2022’s 7.5 percent fall, when China’s covid lockdown disrupted Japanese manufacturers’ supply chains.
The Ministry of Economy official said that the output of auto products slumped 10.1 percent, dragging the overall index lower, and the manufacturing of items such as electronic parts and production machinery dropped 13.5 percent and 4.2 percent, respectively.
Semiconductor-making equipment was down 26.8 percent as chip firms slowed their capital expenditure, while passenger cars fell 7.4 percent due in part to a component supply bottleneck caused by snow across the country.
