Japan’s industrial output rose for the fifth straight month in October and retail sales in the same month grew the most in over a year, signaling the economy was recovering further from the damage caused by the COVID-19 crisis.
The world’s third-largest economy rebounded sharply in the third quarter from a pandemic-induced slump, thanks to surging consumption and exports, though some analysts worry about slowing growth ahead due to a resurgence in coronavirus infections.
“There’s a possibility China-bound exports and output will be sluggish if the United States gets worse, and that would spread to China,” said Takumi Tsunoda, senior economist at Shinkin Central Bank Research.
“But if there will be any impact, it’ll be with a bit of a time lag,” he said, adding that Japanese manufacturers could feel it most strongly in the first quarter of next year.
Breakdown of the November output
Official data released showed factory output jumped 3.8 percent in October from the previous month, mainly due to strength in general machinery production and motor vehicle manufacturing.
The solid increase beat the median market forecast of a 2.1 percent rise in a Reuters poll of economists and was in line with the prior month’s 3.9 percent gain.
Manufacturers surveyed by the Ministry of Economy, Trade, and Industry (METI) expected output to grow another 2.7 percent in November and decline 2.4 percent in December.
“The overall figure was quite strong. The output of capital expenditure-related machinery such as general machinery production was picking up,” Tsunoda said.
Inventories across all industries fell 1.6 percent in October, the seventh straight month of decline, as inventories of inorganic and organic chemicals as well as iron, steel, and non-ferrous metals, were reduced.
Separate data showed retail sales posted their largest gain since September last year in October year-on-year after consumers sharply curtailed spending in October 2019 following a sales tax hike at that time.
Retail sales jumped 6.4 percent year-on-year in October to rise for the first time in eight months, matching a 6.4 percent gain expected by economists in a Reuters poll and turning around from an 8.7 percent drop in the previous month.
Source: Jakarta Post