Japan output, retail sales slump, dampen recovery prospects

Sun Dec 27, 2015 11:16pm EST
 
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Leika Kihara

TOKYO (Reuters) - Japan's factory output fell for the first time in three months in November and retail sales slumped, suggesting that a clear recovery in the world's third-largest economy will be delayed until early in 2016.

While manufacturers expect to increase output in coming months, the weak data casts doubt on the Bank of Japan's view that an expected pick-up in exports and consumption will help jump-start growth and accelerate inflation toward its 2 percent target.

Industrial output fell 1.0 percent in November from the previous month, more than a median market forecast for a 0.6 percent decline, data by the trade ministry showed on Monday.

Separate data showed that retail sales fell 1.0 percent in November from a year earlier, more than a median forecast for a 0.6 percent drop, as warm weather hurt sales of winter clothing.

"We're finally seeing signs of pick-up in exports, but the economy has yet to make a clear turnaround," said Takeshi Minami, chief economist at Norinchukin Research Institute.

"There's a risk consumption will remain sluggish and prevent economic growth from picking up," he said.

Japan's economy narrowly dodged recession in July-September and analysts expect only modest growth in the current quarter, as consumption and exports lack steam.

Some analysts warn the economy may suffer a contraction in October-December if household spending remains weak. Taro Saito, senior economist at NLI Research Institute, expects consumption in the current quarter to have risen less than a 0.4 percent quarter-on-quarter increase in July-September.   Continued...

 
Factories are silhouetted as the sun sets at Keihin industrial zone in Kawasaki, south of Tokyo, Japan, June 29, 2015.  REUTERS/Yuya Shino