Japan’s factory output in unexpected fall for June

Daily Sun 31 July 2012

TOKYO: Japan’s factory output turned down unexpectedly last month, official data showed Monday, stoking concerns that turmoil overseas is damaging a recovery in the world’s third-largest economy.

The output decline came amid growing fears about the fiscal situation in Europe-a major market for Japanese products- and a strong yen hurting demand for products from the nation’s factories.

Industrial production in June edged down 0.1 per cent from the previous month, said the ministry of economy, trade and industry-smaller than a revised 3.4 per cent fall in May but well short of market expectations for a 1.6 per cent rise.

Underlining the downward trend, data also showed that factory output declined 2.2 per cent in the April to June quarter from a year earlier.

“Industrial production appears to be flat (in June),” the ministry said in its monthly report, downgrading its earlier assessment in May, which said production was on a recovery path.

The June decrease was largely due to falling output from automakers and other transport equipment manufacturers, the electronics industry, and the iron and steel sector, it said.

A survey of manufacturers released with the production data was mixed with firms expecting factory output to rise 4.5 per cent in July and fall 0.6 per cent in August.

The latest figures came after central bank and government officials said Japan’s economy appeared to be gaining traction, although they warned that weakness in Europe was the biggest threat to any recovery.

“Economic growth is on a much weaker trend than what the government and the Bank of Japan are telling us to believe,” said Satoshi Osanai, economist at Daiwa Institute of Research in Tokyo. —AFP