TOKYO: Japanese factories slowed in November, spelling out the daunting task that lies ahead for the new conservative government in reviving the world’s third-largest economy.
The 1.7 percent drop in output from a month earlier — worse than a 0.5 percent decline expected by the market — came as a new conservative government took power this week on a campaign that pledged to inject new life into the country’s limp economy, after it won a landslide election earlier this month.
Japan’s economy has been hurt by a strong yen, turmoil in the key European market and the global economic slowdown, confounding the nation’s recovery from the 2011 quake-tsunami disaster and nuclear crisis.
A territorial dispute with Beijing has also weighed on Japanese exports due to a consumer boycott in China stemming from the spat.
The figures reversed a revised 1.6 percent uptick in October factory production, with the economy ministry warning Friday that output was “on a downward trend”.
A survey of manufacturers, however, offered a measure of positive news with producers expecting output to rise 6.7 percent in December and 2.4 percent in January.
Masamichi Adachi, senior economist at JPMorgan Securities Japan, was cautiously optimistic, saying production would “probably” turn positive in the first quarter of 2013.
And that “will probably lead to positive growth in the gross domestic product as well,” Adachi told Dow Jones Newswires.
Last week, the Bank of Japan launched its third major round of monetary easing since September when its counterparts in the US and Europe also made big policy moves. But critics, notably newly installed Prime Minister Shinzo Abe, say Japan’s central bank has not done enough to turn around the lumbering economy.
The BoJ’s own quarterly Tankan survey this month showed confidence among Japanese manufacturers hit a near three-year low in the final months of 2012.
Abe’s Liberal Democratic Party officially took power Wednesday as the yen weakened further on speculation that the 58-year-old’s pressure campaign on the central bank would see it roll out more aggressive action.
The Tokyo stock market has surged — hitting its highest level since last year’s disasters on Thursday—on the weaker currency and as investors cheered a new government which has pledged to fix the long-suffering economy.