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% in September from a month earlier, government data showed on Monday, larger than economists’ median forecast for a 1.0% decline.
It marked the first month-on-month fall in four months in industrial production and followed a 2.7% 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 3.0% in September, the prices firms charge each other rose 9.7% 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 US 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 fueling the yen’s further weakness.
Retail sales rose 4.5% year-on-year in September, extending a rebound since March when the government ended domestic coronavirus curbs. Analysts had expected a 4.1% growth.
In a seasonally-adjusted month-on-month basis, retail sales grew 1.1% 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 2.0% 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 US monetary tightening. ($1 = 147.6500 yen) (Reporting by Kantaro Komiya; Editing by Kim Coghill)