Japan’s Industrial Output, Retail Sales Stall in September

Japan's Factory Output Unchanged in September

Japan’s industrial production was unchanged in September from a month earlier, falling short of forecasts, in the latest snapshot of Japan’s economy as the central bank board gathers to consider monetary policy. Retails sales were also unchanged, reflecting sustained weakness in consumer spending.

Key Points

  • Industrial output was unchanged in September from a month earlier (forecast +0.9 percent).
  • Output is forecast to rise 1.1 percent in October, then rise 2.1 percent in November.
  • Retail sales were unchanged from the previous month (forecast +0.2 percent).

Big Picture

The BOJ starts a two-day meeting on Monday during which it will review its inflation outlook and monetary policy. A stronger yen and softer external demand this year have buffeted Japanese exports, which have fallen in each of the past 12 months. This has weighed on industrial production and frustrated efforts by the central bank and Prime Minister Shinzo Abe to revive the nation’s economy. The yen has gained about 15 percent against the U.S. dollar in 2016, hurting exporters’ earnings and discouraging companies from increasing spending. Some economists say exports appear to have bottomed out, and the yen has retreated around 3 percent over the past month. 

Economist Takeaways

  • “The focus now will shift to GDP for July-September," said Toru Suehiro, senior market economist at Mizuho Securities Co. in Tokyo. "Looking at the production report, I think GDP will lack strength and post a small gain, which would increase calls for stimulus measures to boost growth.”
  • “There is no sector that can drive growth in the long term," Suehiro said.

The Details

  • Industrial output rose 0.9 percent in September from a year earlier (forecast +1.9 percent)
  • Retail sales fell 1.9 percent from a year ago (forecast -1.8 percent).
Before it's here, it's on the Bloomberg Terminal.
LEARN MORE