No matter what policymakers try, the Japanese economy just can’t seem to find traction right now, continuing the pattern seen for much of the past 25 years.
It’s seemingly a case of one step forward, one step back.
Retail sales, household spending, manufacturing activity are all contracting, while core consumer price inflation currently sits at a three-year low. Only the labour market is showing signs of life, and even then it’s not enough to spur any meaningful wage pressures.
Now you can add industrial output the growing list of disappointing data prints.
According to the Ministry of Economy, Trade and Industry, output levels came in flat in July in seasonally adjusted terms, failing to capitalise on the strong 2.3% gain in June.
It was well below market forecasts for a gain of 0.8%.
As a result of the monthly miss, the year-on-year contraction accelerated to 3.8%, the steepest seen since January. The figure was well below the 1.5% decline seen in the year to June and marked the fourth straight month that output had contracted on an annualised basis.
Ever the optimists, manufacturers see output lifting by 4.1% in August, up from the previous view for a 2.4% gain.
Outside of output, shipments rose by 0.9% in July while inventories fell by 2.4%.
Though factory activity was hindered earlier in the year by plant shutdowns at manufacturers such as Honda, Toyota and electronics giant Sony following a series of earthquakes that struck the nation in April, the weak outcome casts further doubt about the health of the Japanese economy, and will do little to dissuade the view that the Bank of Japan will add to monetary policy stimulus when it meets in late September.
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