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Japan's January industrial output tumbled 6.6%

  • Japan's industrial output tumbled 6.6 percent in January from the previous month, government data showed on Wednesday.
  • This was partly hurt by a decline in the production of cars due to lower sales to the United States. Output of cars and trucks fell 14.4 percent, while construction equipment fell 7.8 percent.
  • On the whole, the data suggests that the economy may face a bumpier ride than in the past two years, further undermining efforts by the Bank of Japan to boost inflation to its elusive 2 percent target.
Yoshikazu Tsuno | AFP | Getty Images

Japan's industrial output tumbled in January, partly hurt by a decline in the production of cars
due to lower sales to the United States, raising concerns that companies might curb output further to clear out inventories.

Trade ministry data out on Wednesday showed factory output fell 6.6 percent in January from the previous month, more than economists' median estimate of a 4.2 percent decline and following a 2.9 percent gain in December.

The decline was led by lower output of cars, trucks, construction equipment, and memory chips.

Manufacturers surveyed by the Ministry of Economy, Trade and Industry (METI) expect output to rise 9.0 percent in February but fall 2.7 percent in March.

On the whole, the data suggests that the economy may face a bumpier ride than in the past two years, further undermining efforts by the Bank of Japan to boost inflation to its elusive 2 percent target.

However, with global demand in good fettle, the next few months will likely indicate if growth could be sustained over the course of the year.

Output of cars and trucks fell 14.4 percent, while construction equipment fell 7.8 percent.

One factor that could temporarily weigh on Japan's industrial output is the Lunar New Year holidays in China and other Asian countries this month.

Japan's economy has grown for eight straight quarters, its longest continuous expansion since the 1980s boom, moving Prime Minister Shinzo Abe's revival plan a step closer to vanquishing
decades of stagnation.

Consumer spending, exports, and capital expenditure have helped drive growth. Economists say consumer spending could lose some momentum this year but they expect exports to remain strong thanks to sustained global demand.