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Japan November factory output growth stalls after rising for 5 months

Daniel Leussink
·2-min read
A factory is reflected in a traffic mirror at the Keihin industrial zone in Kawasaki

By Daniel Leussink

TOKYO (Reuters) - Japan's industrial output growth stalled in November after rising for five months, underscoring the fragile nature of the global economic recovery due to a recent resurgence in COVID-19 infections.

The world's third-largest economy recovered sharply in the third quarter from its worst postwar contraction, but lockdown measures in some major economies in response to a new wave of coronavirus infections threatens to hurt demand.

Official data released on Monday showed factory output was flat in November from the previous month, as declining output of cars and plastic products offset strength in production and general machinery output.

The flat reading was much slower than the prior month's final 4.0% gain, and below the median market forecast of a 1.2% rise in a Reuters poll of economists.

"The recovery pace is slowing a little more than expected," said Takumi Tsunoda, senior economist at Shinkin Central Bank Research Institute.

Tsunoda still expected the positive trend in output to continue largely because of underlying strength in Japan's exports, which are heavily focused on Asia.

"Demand for high-tech and IT-related products is currently expanding, so I think that will provide support," he said.

Manufacturers surveyed by the Ministry of Economy, Trade and Industry (METI) expected output to decline 1.1% in December and see a sharp 7.1% rebound in January.

The government kept its assessment of industrial production unchanged, saying it was picking up.

Factory output has been recovering from a pandemic-induced downturn earlier this year, helped particularly by solid global demand for cars. Car output in November suffered from falling shipments to the United States and Australia, a government official said.

Some analysts worry that new virus infections around the world, especially in Europe and the United States, may prevent demand for Japan's manufactured goods to grow further as corporate and consumer activity take a hit.

Separate data released on Friday showed Tokyo consumer prices in December fell at their fastest pace since September 2010, while nationwide retail sales slowed in November.

(Reporting by Daniel Leussink; Editing by Jacqueline Wong)