Japanese Factory Output Drops For First Time in Five Months

Japan’s factory output fell by the most in more than two years in June although the labor market improved, a sign Prime Minister Shinzo Abe’s pro-growth policies are bearing fruit but still have far to go to establish a durable recovery.

The first fall in industrial production in five months largely reflected manufacturers trying to avoid inventory build-up, and they forecast a brisk pick-up in July.

The best levels of unemployment and job availability since 2008 augur well for the private spending that Abe has sought to trigger through aggressive monetary and fiscal stimulus since he took office in December.

The batch of data serves as the six-month scorecard for Abe, who is seeking to strike a balance between reviving growth and fiscal consolidation, while facing a tough decision on whether to go ahead with a planned sales tax hikes from next year.

The 3.3 percent month-on-month fall in industrial output was the largest since March 2011, when a massive earthquake and tsunami ripped through Japan’s northeast coastal areas, Ministry of Economy, Trade and Industry data showed on Tuesday.

It missed forecasts of a 1.8 percent fall in a Reuters poll due to lower production of cars amid decline in demand at home and abroad. Output of semiconductors also decreased, reflecting weakening demand for smartphones in Asia.

via Reuters

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