Published On: Mon, Mar 31st, 2014

Japan Factory Output Slows Unexpectedly In February

Factory output in Japan declined by 2.3% in February, official figures released on Monday show.The fall could add to concerns about a slowdown in the world’s third-largest economy.

Japan factory output slows

February’s figure was the first decrease in three months, and it surprised many analysts who were expecting a boost ahead of a planned tax increase.

Sales tax will increase in Japan from 5% to 8% on 1 April.

The move is intended to combat Japan’s growing debt load, and it is part of Prime Minister Shinzo Abe’s plan to boost prices.

Mr Abe has stated that he would like to see prices increase by 2% – which would be a sign that Japan has won its battle against deflation, or declining prices.

Weak data

However, many analysts had been expecting to see a boost in spending and output ahead of the tax increase.

But the 2.3% month-on-month drop in factory output came as a surprise, particularly after the 3.8% expansion in January.

A separate private survey of executives at 400 companies in Japan from Markit/JMMA also reported that factory output in the country had slowed to its lowest level since September.

The weak factory data follows a raft of other disappointing figures, including weaker than expected household spending and declining retail sales.

This has added fuel to speculation among analysts that the Bank of Japan might act this spring to further boost the Japanese economy.