Japan manufacturing output up in January, retail sales fall

TOKYO – Japan’s industrial production rose in January from the month before, beating forecasts, while retail sales fell, suggesting the recovery of the world’s third-largest economy is still on the ropes.

January’s increase in factory output was a turnaround from month-on-month declines in November and December. But production was down 3.8 per cent from January 2015, and is forecast to fall by 5.2 per cent month-on-month in February, partly due to weak demand as the world economy slows.

Marcel Thieliant of Capital Economics said in a note that the economy would likely remain in the doldrums in this quarter.

“The rebound in industrial production in January is unlikely to assuage concerns about the health of Japan’s economy as firms are predicting a renewed slump in February,” he said.

Japan’s central bank recently began a negative interest rate policy aimed at getting banks to lend more to help spur business activity and fend off deflation. Japan’s inflation rate was flat in January, according to data reported earlier.

Finance ministers and central bank governors of the Group of 20 rich and developing economies called for using all policy tools available to help fend off recession as they wrapped up a meeting in Shanghai over the weekend.

Data released Monday showed Japan’s manufacturing index was at 99.8 in January compared with a base of 100 in 2010. Prime Minister Shinzo Abe has sought to rekindle growth with a three-pronged approach of monetary stimulus, government spending and reforms.

Retail sales fell 1.1 per cent in January from the month before and were down 4.3 per cent from a year earlier. Other key data, such as wages, household spending and the jobless rate, are due Tuesday.

So far, the “Abenomics” strategy has leaned heavily on the Bank of Japan’s unprecedented barrage of monetary stimulus through massive asset purchases. The injections of trillions of dollars into the economy each year have helped weaken the yen, boosting the profits of corporations and, for a time, pushing share prices higher.

But since companies have shied away from raising wages or making sizable investments in operations in Japan, growth has remained tepid.