Japan factory output likely shrank on trade war

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    TOKYO- Japan’s factory output is expected to have shrunk for the second straight month in November, according to a Reuters poll, highlighting the increasing strain on the export-reliant economy from the US-China trade conflict and sluggish global demand.

    Retail sales are also seen down in November as consumers tighten their purse strings after a sales tax hike that rolled out in October, the poll showed.

    The data will likely keep the Bank of Japan under pressure to maintain its massive stimulus program to prevent the economy from sliding into another recession, analysts say.

    “There’s no sign exports are bottoming out. Domestic demand also appears sluggish since the tax hike,” said Takeshi Minami, chief economist at Norinchukin Research Institute.

    Industrial output is expected to have fallen 1.4 percent in November from the previous month, the poll showed, which would follow a hefty 4.5 percent drop in October, the poll showed.

    As well as the hit from the bitter global trade conflict, companies were still reeling from supply disruptions caused by typhoons that could take several more months to stabilize, analysts say.

    Retail sales likely fell 1.7 percent in November from a year ago, the poll showed, casting doubt on the BOJ’s view that robust domestic demand will make up for some of the weakness in exports and underpin a fragile economic recovery.– Reuters