A worker walks near a factory at the Keihin industrial zone in Kawasaki, Japan. REUTERS/Issei Kato/File photo
TOKYO – Japan’s factory output fell in September for the first time in four months as manufacturers took a hit from rising costs for raw materials and the global economic slowdown.
But in a brighter sign for the world’s third-largest economy, retail sales grew for a seventh straight month, raising hopes for a sustainable boost in consumption after the easing of COVD-related border controls for foreign tourists earlier this month.
Factory output fell a seasonally adjusted 1.6 percent in September from a month earlier, government data showed on Monday, larger than economists’ median forecast for a 1-percent decline.
It marked the first month-on-month fall in four months in industrial production and followed a 2.7 percent rise in August.
Confidence among Japanese manufacturers likely soured in October, a Reuters corporate survey showed earlier this month, with inflation among major concerns for Japan’s businesses.
While Japan’s annual consumer inflation rate was at 3 percent in September, the prices firms charge each other rose 9.7 percent in the same month.
Inflationary pressures in import-reliant Japan have been exacerbated by a prolonged slide in the yen, which hit a fresh 32-year-low against the U.S. dollar this month.
On Friday, the government announced a 39 trillion yen ($264 billion) package as an inflation countermeasure funded by an extra budget of 29.6 trillion yen, while the Bank of Japan decided to keep its ultra-loose monetary easing unchanged to support the fragile economy, even with the risk of fuelling the yen’s further weakness.
Retail sales rose 4.5 percent year-on-year in September, extending a rebound since March when the government ended domestic coronavirus curbs. Analysts had expected a 4.1-percent growth.
In a seasonally-adjusted month-on-month basis, retail sales grew 1.1 percent in September.
A further bounce is expected in coming months after Japan eased border controls on Oct 11 for foreign tourists.
Economists polled by Reuters last week expected the Japanese economy to expand an annualized 2 percent in October-December, slightly better than their previous estimate, while pointing out the biggest risk to Japan’s economy over the next year is a prolonged period of U.S. monetary tightening.
($1 = 147.6500 yen)