Japan factory output falls at fastest pace in nearly four years

A petrochemical plant is reflected in a puddle at an industrial complex in Kawasaki near Tokyo Aug 31, 2015. REUTERS/Thomas Peter/File photo

TOKYO  —Japan’s January factory output fell at the fastest pace since May 2020, government data showed on Thursday, as a production downturn in motor vehicles adds to concerns about the fragility of an economy that slipped into recession late last year.

Industrial output fell 7.5 percent in January from the previous month, data from the Ministry of Economy, Trade and Industry (METI) showed. It was slightly worse than the median market forecast for a 7.3-percent drop, with output sliding in 14 of the 15 industries surveyed by METI.

The ministry also downgraded its assessment of industrial output for the first time since July last year, laying bare the challenges for the economy as it tries to recover from a recession at the end of last year.

READ: Japan downgrades view of economy on sluggish consumer spending

Production declined the most in motor vehicles, down 17.8 percent in January from the previous month. Output decreases in regular passenger cars and electrical drives systems pulled down the overall figures.

Japanese automaker Toyota Motor in January suspended shipments of some models after finding irregularities in certification tests for diesel engines developed by affiliate Toyota Industries.

READ: Toyota suspends shipments of 10 models on testing irregularities

Toyota’s small-car unit Daihatsu also continued to suspend production at its domestic plants through January due to misconduct related to rigged collision-safety tests.

Retail sales up

Manufacturers surveyed by the Ministry of Economy, Trade and Industry expect seasonally adjusted output to increase 4.8 percent in February and rise 2 percent in March.

However, the forecast production gains for February and March are not large enough to offset January’s drop, a METI official said.

Separate data showed Japanese retail sales rose 2.3 percent in January from a year earlier, government data showed, marking a 23rd straight month of increase.

It matched the median market forecast for a 2.3-percent rise.