BY SATOSHI SUGIYAMA
TOKYO — Japanese factory output rose at a slower-than-expected pace in May, government data showed on Monday, as sweeping US tariffs were threatening to derail the country’s already fragile economic recovery.
Industrial output rose 0.5 percent in May from the previous month, data from the Ministry of Economy, Trade and Industry (METI) showed, less than a median market forecast for a 3.5 percent rise.
Manufacturers surveyed by METI expect seasonally adjusted output to rise 0.3 percent in June and fall 0.7 percent in July.
“It’s necessary to pay close attention to the worsening trend in sentiment (among manufacturers on) production planning,” a METI official said.
Tokyo is scrambling to find ways to get Washington to exempt its automakers from automobile industry-specific tariffs of 25 percent, which are severely impacting the country’s manufacturing sector. Japan also faces a 24 percent “reciprocal” tariff rate starting on July 9 unless it can negotiate a deal with Washington.
Motor vehicle production went up by 2.5 percent and shipments jumped 10.5 percent in May from a month prior, the data showed. Some manufacturers had moved up their shipments because of the tariffs, the METI official said.
The number of firms mentioning that the tariffs had an impact on their production or shipment increased slightly from April, the official said.
“Exports are likely to remain sluggish and production indices are expected to continue show weakness in response to the global economic slowdown,” said Yutaro Suzuki, an economist at Daiwa Securities.
The hit from US tariffs could derail a lacklustre recovery in Japan’s economy, the world’s fourth largest. The economy shrank in January-March, the first contraction in a year, due to subdued private consumption.
