Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Japan's May factory output records biggest drop in a year

EconomyJun 29, 2021 10:07PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: Smoke rises from a factory during the sunset at Keihin industrial zone in Kawasaki, Japan, January 16, 2017. REUTERS/Toru Hanai/File Photo

By Daniel Leussink

TOKYO (Reuters) -Japan's industrial output posted the biggest monthly drop in a year in May, as a sharp fall in car production threatened to undermine the country's economic recovery just weeks before Tokyo is set to host the Olympic Games.

The world's third-largest economy will likely grow at a much slower pace than initially thought in the current quarter in part due to weakness in consumer spending, a poll by economists showed this month.

Factory output slumped 5.9% in May from the previous month, official data showed on Wednesday, hit by declines in the manufacturing of cars and production machinery to post its largest monthly drop since May last year.

The contraction, which was the first drop in three months, was much weaker than a 2.4% fall forecast in a Reuters poll of economists. It followed a 2.9% gain in the previous month.

Output was weighed by a 19.4% drop in motor vehicle production, largely due to supply issues with semiconductor chips, the Ministry of Economy, Trade and Industry (METI) said.

The car industry has a big impact on Japan's overall economy. Manufacturers of intermediate goods, such as tires and electrical lighting of passenger cars, are taking a hit from declines in motor vehicle production.

"The service sector was impacted by a state of emergency. If output comes in negative in the second quarter, the economy will be pushed down considerably," said Ayako Sera, market strategist at Sumitomo Mitsui (NYSE:SMFG) Trust Bank.

"There's a possibility the economy will see negative growth," she said, adding that may show Japan as a laggard in its coronavirus recovery compared to other major global economies.

Manufacturers said they expected output to rebound 9.1% in June and drop 1.4% in July, though those forecasts may not fully take the global semiconductor supply issue into account, a trade ministry official said.

The worse-than-expected output data comes weeks before the start of the Tokyo Summer Olympics on July 23, which were already delayed by a year.

A successful staging of the Games may help boost confidence among the Japanese public, which could stimulate household consumption and broader demand conditions at home.

Separate figures on Tuesday showed retail sales rose for a third straight month in May, but failed to dispel worries that the economic recovery will take time to gather steam as COVID-19-linked pressures remained.

Japan's economy slipped into contraction in the first quarter as a late vaccine rollout and emergency measures put in place to stem a rise in infections have taken a toll on domestic demand, throwing into doubt the country's economic outlook.

Despite those setbacks, Economy Minister Yasutoshi Nishimura expects the economy to return to pre-coronavirus levels in the current fiscal year, which runs through March 2022.

Japan's May factory output records biggest drop in a year
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email