Japan’s industrial output fell in February at the fastest pace in eight months due to declines in production of machinery, cars and electronics in a worrying sign that domestic demand could be faltering. Economists were already braced for a fall as many companies were expected to trim output due to the timing of Lunar New Year holidays, but the 3.4 percent month-on-month decline in February was much worse than expected at almost double the median estimate for a 1.8 percent fall.
Manufacturers’ forecasts for the coming months still point to a gradual recovery in output, but the outlook is less certain and could complicate the Bank of Japan’s task as the economy slowly rebounds from last year’s recession. “These results are a little worrying, because the decline in auto output could be due to weak domestic demand,” said Hidenobu Tokuda, senior economist at Mizuho Research Institute.
“Output is still on course to recover, but another disappointing number makes this scenario less likely.” February’s output slump was the biggest since June last year, when production also fell by 3.4 percent. Manufacturers surveyed by the trade ministry expect output to fall 2.0 percent in March and rise 3.6 percent in April.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.