Japan’s Factory Output Expected to Decline Due to Weak Overseas Demand and Typhoon Disruptions: Reuters Poll

TOKYO – Japan’s industrial output is projected to have declined in August, impacted by diminished overseas demand and temporary factory shutdowns caused by a typhoon. These factors could hinder the overall momentum of the economic recovery, according to a Reuters poll conducted on Friday.

The poll, which surveyed 18 analysts, predicted a 0.9% decrease in industrial output for August compared to the previous month, following a notable 3.1% increase in July.

Takeshi Minami, chief economist at Norinchukin Research Institute, noted that industrial production is fluctuating due to slower growth in the global economy, lackluster exports of high-tech products, and ongoing issues related to automobile certification scandals. He indicated that automobile exports were likely weak and that both domestic and international demand for machine tools remained subdued.

Typhoon Shanshan, which affected Japan in late August, may have further pressed down factory output. This weather event led to temporary halts in production at major manufacturers, including Toyota and semiconductor producer Renesas.

The economy of Japan experienced slightly slower growth in the second quarter than initially reported, primarily due to downward adjustments in corporate and household spending. However, analysts expect the economy to keep improving, buoyed by rising wages and increases in personal and corporate spending. Nonetheless, there are external risks to consider, such as the potential slowdown in the U.S. economy and weak demand from China. Recently, China has introduced several stimulus measures, but experts suggest that revitalizing economic activity will take time.

In the retail sector, sales are anticipated to rise by 2.3% in August compared to the previous year, following a 2.6% increase in July. Economists attribute this growth to strong demand for clothing and preserved food, spurred by the effects of the typhoon and an earthquake.

Japan’s unemployment rate is expected to slightly decrease to 2.6% in August from 2.7% in July, with the jobs-to-applicants ratio likely remaining steady at 1.24.

The trade ministry is set to announce both factory output and retail sales figures on Monday, Sept. 30, while employment data will be released on Tuesday, Oct. 1.