TOKYO- Japan’s industrial output likely fell in July as export demand for capital goods stagnated and supply chains were further disrupted by the spread of the Delta coronavirus variant in Asia, a Reuters poll showed on Friday.
The poll also showed retail sales, a key barometer of consumer spending, were expected to post a fifth straight month of year-on-year gains in July, helped by growing demand for electronics and clothing.
Factory output was projected to have fallen 2.5 percent from the previous month in the poll of 18 economists, dropping into contraction after a sharp 6.5 percent jump in June, the highest growth since July 2020.
“With the chip shortage issue, the global spread of the Delta variant and particularly its impact on parts supply from Southeast Asia puts pressure on production” by Japanese manufacturers, said Takeshi Minami, chief economist at Norinchukin Research Institute.
Analysts at SMBC Nikko Securities attributed the expected output drop to weak Asia-bound machinery exports, while adding that a recovery in car production was likely to offset some of the decline.
Japan’s exports marked a fifth straight month of double-digit growth in July, driven by US-bound shipments of automobiles in a positive sign for a trade-led economy, although a key gauge of capital spending fell for the first time in four months.
The mixed batch of indicators underscored fragility in the world’s third-largest economy, which grew 1.3 percent in the April-June quarter due to solid exports and a surprise gain in private consumption.
However, prolonged coronavirus curbs on bars, restaurants and other face-to-face service sector businesses cloud the outlook, piling pressure on Prime Minister Yoshihide Suga to deploy another big stimulus package.
Ministry of Finance data out on Wednesday showed Japanese exports grew 37.0 percent year-on-year in July, a tad slower than a 39.0 percent increase expected by economists in a Reuters poll, although the gain was exaggerated by the contrast to the prior year’s COVID-induced slump.
It followed a 48.6 percent growth in the prior month.
