Key facts
- Japan's factory output increased 0.5% month-on-month in May.
- This monthly gain missed the market forecast of 1.1%.
- Year-on-year, factory output fell 1.8%, below the expected 1.6% rise.
- Manufacturers anticipate a 3.7% increase in June and flat output in July, though a separate forecast suggests 0.3% growth in June and a 0.7% decline in July.
Japan's factory output saw a modest increase of 0.5% in May compared to the previous month, falling short of the 1.1% rise anticipated by the market. On an annual basis, industrial production declined by 1.8%, also missing expectations of a 1.6% increase. This weaker-than-expected performance, partly attributed to U.S. tariffs impacting exports, casts a shadow over the economic outlook for Japan, which is already facing the possibility of a technical recession.
Looking ahead, manufacturers surveyed by the Ministry of Economy, Trade and Industry expressed cautious optimism, initially forecasting a 3.7% increase in June output and a flat performance in July. However, a separate forecast indicated a more subdued outlook, with expectations of a 0.3% monthly gain in June and a 0.7% decline in July.