Japan factory output hits three year-low on weak domestic demand, export slump

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Japan’s industrial output slid in May at the fastest rate in three months to its lowest level since June 2013, highlighting concerns about falling exports and weak consumer spending.

May’s 2.3 percent fall in industrial output considerably exceeded the median estimate for a 0.1 percent decline forecast in a Reuters poll.

“The decline in industrial output is directly related to the decline in exports,” said Hidenobu Tokuda, senior economist at Mizuho Research Institute.

“Another factor is the slow recovery in domestic consumer spending. The government should consider some measures to improve domestic demand.”

Japan’s government plans to announce more fiscal stimulus spending this autumn to revive Prime Minister Shinzo Abe’s economic agenda. Strengthening domestic demand has become even more urgent as gains in the yen further threaten exports.

Output fell in May due to declines in the production of chemicals, cosmetics, construction equipment and semiconductors, data from the Ministry of Economy, Trade and Industry showed.