Photographer: Akio Kon/Bloomberg

Economic Takeaways From Japan’s Production, Retail Sales Data

What you need to know about Monday’s economic data released in Japan: The outlook for industrial production remains uncertain, even after a rebound in the volatile figures in January from a decline at the end of 2015. Retail sales posted the first three-month slide since 2012, indicating a cloudy picture for an economy struggling to grow.

INDUSTRIAL PRODUCTION (JANUARY)

  • Output rose 3.7 percent (3.2 percent forecast) from December, when it dropped 1.7 percent.
  • Output is forecast to fall 5.2 percent in February, then rise 3.1 percent in March.
  • Measured year-on-year, production fell 3.8 percent in January, as forecast.

The takeaway: The data provide a glimmer of hope that the economy may be rebounding after contracting in the final quarter of 2015. Even so, this year stocks have slumped and the yen has gained against the dollar, adding to worries that Japan’s gross domestic product will keep seesawing between modest growth and contraction. An earlier government report for January showed exports dropped the most since 2009.

Economist’s view: “Production was better than expected but it’s too early to be sanguine about it,” said Kazuhiko Ogata, the chief Japan economist at Credit Agricole in Tokyo. “Japan’s economy is getting hit by a double punch: with weakness in consumer spending and in the global economy. Doubts over Abenomics are rising among the public.”

RETAIL SALES (JANUARY)

  • Retail sales fell 1.1 percent (0.1 percent forecast) from December, when they dropped 0.3 percent.
  • Measured year-on-year, sales fell 0.1 percent as forecast, following a 1.1 percent decline in December.

The takeaway: The report suggests that weakness in consumer spending -- which played a big part in the economic contraction last quarter -- may continue. The lack of strength in consumption highlights the need for bigger pay increases at the spring wage talks. So far, indications are poor for decent gains in earnings.

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