TOKYO- Japanese factories likely cut back output in July after the prior month’s near double-digit surge, a Reuters poll showed on Friday, as manufacturers struggled to shake off the drag from supply disruptions and a high-tech chip shortage.
Industrial production in the world’s third-largest economy likely slipped 0.5 percent in July from the previous month, according to the median forecast of 18 economists in the poll.
Output had surged 9.2 percent in June after China eased COVID-19 curbs and the major Chinese city of Shanghai came out of a pandemic lockdown at the beginning of that month.
Japan’s economy rebounded at a slower-than-expected pace in the second quarter from a COVID-induced slump, data showed this month, while growing fears of a global slowdown are clouding the outlook for the trade-reliant nation.
Takeshi Minami, chief economist at Norinchukin Research Institute, cautioned that Japanese manufacturers were unlikely to be out of the woods, adding that he expected demand for their products to stagnate ahead.
“As for the outlook, the semiconductor shortage is becoming chronic and caution about surging prices and the acceleration of interest rate hikes overseas is high,” he added.
Separate Ministry of Economy, Trade and Industry (METI) data is expected to show retail sales in July rose 1.9 percent from a year earlier, quickening from a 1.5 percent rise previously, supporting the view consumption is recovering moderately from its pandemic hit.
Job availability and the jobless rate were expected to hold steady from the previous month in July, coming in at 1.27 and 2.6 percent, respectively.
Japan ran a current account deficit for the first time in five months in June as surging imports eclipsed exports, data showed on Monday, highlighting the pressure that higher energy and raw material prices are putting on the economy.
The world’s third-largest economy ran a current account deficit of 132.4 billion yen ($980 million) in June, government data showed, reversing 872 billion yen from the same month a year earlier.
The data, which marked the first monthly deficit since January, was smaller than economists’ median forecast for a 703.8 billion shortfall in a Reuters poll.
High prices for energy sources like oil and coal drove the value of imports to a record, surging 49 percent year-on-year and outpacing a 20 percent rise in the value of exports led by “mineral fuels” and steel.
The current account data underscored the change in Japan’s economic structure as the country earns hefty returns from its portfolio investments and direct investment overseas, which are offsetting deficits in its trade balance.
The current account surplus has declined for four fiscal years in a row through March 2022.
While yen weakness has inflated the cost of imports, its boost to the value of exports has not been as great as it once was due to an ongoing shift of exporters’ production abroad.