Japan’s April factory output slumps in worrying sign for economy

A worker cycles near a factory at the Keihin industrial zone in Kawasaki, Japan February 28, 2017. REUTERS/Issei Kato

TOKYO, May 31 (Reuters) – Japan’s factories posted a sharp fall in output in April as China’s COVID-19 lockdowns and wider supply disruptions took a heavy toll on manufacturers, clouding the outlook for the trade-reliant economy.

Separate data showed retail sales posted the largest rise in nearly a year as consumers stepped up spending after the government eased pandemic curbs, withstanding pressure from wider price rises that threaten to hurt demand at home.

Factory output dropped 1.3% in April from the previous month, official data showed on Tuesday, on sharp falls in the production of items such as electronic parts and production machinery.

It was the first fall in three months and much weaker than a 0.2% decline expected by economists in a Reuters poll.

The data comes a day after Toyota Motor Corp (7203.T), the world’s largest automaker by sales, missed its global production target for April after output fell more than 9% year-on-year. read more

Toyota’s output slump last month came after the Japanese carmaker on Friday cut its global production plan for June and signalled the possibility of lowering its full-year output plan of 9.7 million vehicles. read more

While activity in Japan’s services sector is picking up as the pandemic subsides, the country’s manufacturing sector has been pressured by supply disruptions and higher material prices caused by Russia’s war in Ukraine.

Manufacturers surveyed by the Ministry of Economy, Trade and Industry (METI) expected output to return to growth in May, gaining 4.8%, followed by a 8.9% advance in June.

Separate data showed retail sales grew 2.9% in April from a year earlier, marking their sharpest gain since May 2021. That was bigger than the median market forecast for a 2.6% rise.

The jobless rate stood at 2.5% from the previous month’s 2.6%, while an index gauging job availability was at 1.23.

Reporting by Daniel Leussink; Additional reporting by Yoshifumi Takemoto and Kantaro Komiya; Editing by Sam Holmes

Our Standards: The Thomson Reuters Trust Principles.