Japan's factory output falls for second month

Tokyo (AFP) –


Japan's factory output dropped in June for the second consecutive month, official figures showed Tuesday, underscoring the patchy nature of the country's economic recovery.

The trade and industry ministry said output was down 2.1 percent in June from the previous month, far more than expectations for a 0.3 percent decline.

The fall was the second consecutive monthly drop and was the result largely of a decline in the production of chip-making equipment, said Hirotaka Yazawa, economist at Mizuho Research Institute.

"But given that the outlook for production in July is positive, I see the decline as a matter of timing," caused by a temporary adjustment in production, he told AFP.

The decline "does not mean the economy is slowing down," he added.

The latest figures come as the Bank of Japan is due to announce a policy decision later Tuesday after a two-day meeting.

Market watchers have speculated that the central bank could make minor changes to its ultra-loose monetary easing programme.

New data from Japan's labour ministry released Tuesday meanwhile showed the jobless rate edged up to 2.4 percent in June from a 26-year low of 2.2 percent the previous month.

But the jobs-to-applicants ratio is at its highest rate in 44 years, with 162 job offers going for every 100 job hunters, the labour ministry said.

Japan has long struggled with a tight labour market, thanks to an ageing society, a perennially low birth rate and very low levels of immigration.

The government has proposed slightly loosening tight restrictions on foreign workers to help ease the problem.

In June, confidence among Japan's biggest manufacturers slipped for the second straight quarter in the Bank of Japan's key business survey.

Japan's economy slid into reverse for the first time in two years at the beginning of 2018, hit by sluggish consumption and a winter cold snap.

The economy contracted by 0.2 percent quarter-on-quarter in the January-March period, compared with growth of 0.1 percent at the end of 2017.

That brought to an end a series of eight consecutive quarters of growth, a winning streak not seen since the heady days of the "miracle" boom of the 1980s.