TOKYO: Japan’s factory output fell for the first time in 12 months in February while unemployment remained unchanged at 4.9 per cent, data showed yesterday, underlining the fragile nature of the economic recovery.Asia’s biggest economy last year emerged from its worst post-war recession, growing at a modest 0.9 per cent in October-December due to rebounding exports, much of them to booming China, and government stimulus measures at home.
However renewed deflation is seen as a threat to the recovery, exacerbating already subdued consumer demand from Japan’s shrinking and ageing population.
Average household spending in February slipped 0.5 per cent from the previous year and 1.6 per cent from the previous month, according to official data.
The new government figures showed factory output fell 0.9 per cent in February, marking the first monthly drop over the past year. The fall was sharper than market expectations of a decline of 0.5 per cent.
On-year, however, output was up 31.3 per cent.
The jobless rate of 4.9 per cent in February was unchanged from the previous month, and in line with market expectations. There were 47 jobs available for every 100 job seekers, the labour ministry said.
Analysts said the data underlines that the recovery of the world’s second largest economy remains uneven, partly because of the diminishing effects of government stimulus measures, but they said the data was no cause for alarm.
“The first decline in the past year in industrial output is a slightly worrying factor,” said Taro Saito, economist at NLI Research Institute.
“But my overall evaluation is that the economy is on the right track to recovery, although at a slowing pace,” he said, noting that the government predicts factory output will pick up again in March.
Nomura Securities economist Ryota Sakagami also remained broadly optimistic, saying: “Overall, the trend is one of recovery despite the negative figures issued today, and I don’t see a huge risk of a double-dip recession.”
Sakagami said the country’s job market is also “improving at a very slow pace, given that the number of job seekers has declined”.
“Consumption is falling partly because of a decline in the effects of the government’s stimulus package including subsidies to purchase environmentally-friendly products,” Sakagami said.
The ministry of economy, trade and industry predicted factory output was likely to rise 1.4 percent in March from last month, saying in a statement: “On the whole, production is moving in the direction of recovery.”
Meanwhile, the Japan Automobile Manufacturers Association said domestic production of passenger vehicles, trucks and buses was up 74.9 per cent from a year ago to 841,796 in February.
Exports jumped 79.8 per cent to 381,407, the association said, pointing at a rebound from a deep industry-wide slump during the global downturn last year.
“The industry last year experienced historic lows. The latest figures may seem strong, but the actual level is still 70 to 80 per cent of what they were before the global economic crisis,” said a JAMA spokeswoman.
“The recent recovery has been attained with help from the government’s special incentive programmes,” such as tax breaks and subsidies, she said.
“The special programmes will end sometime. We will see what will happen without the help.” — AFP