Economic Indicators

Japan May factory output seen dipping for 2nd month on China lockdown- Reuters poll


FILE PHOTO: A worker cycles near a factory at the Keihin industrial zone in Kawasaki, Japan, November 15, 2017. REUTERS/Toru Hanai

By Kantaro Komiya

TOKYO (Reuters) – Japan’s factory output probably fell in May for a second successive month due to supply chain disruptions caused by strict COVID-19 lockdowns in China, a Reuters poll showed on Friday.

Japanese industrial production in the month was likely 0.3% lower than in April, according to the median estimate of 18 economists in the poll.

That would follow a 1.3% slip in April, which was the first fall in three months.

“Bottlenecks from the semiconductor crunch and the components shortage due to China’s Shanghai lockdown likely kept (Japan’s) production weak,” said Shumpei Fujita, economist at Mitsubishi UFJ (NYSE:MUFG) Research and Consulting.

Some analysts, meanwhile, expected a slight increase in May factory output thanks to robust manufacturing of electronic parts and production machinery.

Less optimistically, Japan’s production outlook “remains seesawing, with greater concerns now about such things as unexpectedly prolonged disruption to supply and rising raw material prices,” Takeshi Minami, chief economist at Norinchukin Research Institute, said.

In other results of the poll, May retail sales were forecast to have been up 3.3% on a year earlier, posting the third month of annual growth.

The poll also found Tokyo’s core consumer price index – a leading indicator of Japanese price trends – was likely 2.1% higher in June than a year earlier, accelerating from a 1.9% annual rise seen in May.

Japan’s May unemployment rate was seen flat at 2.5% and the ratio of jobs to applicants was expected to tick up to 1.24.

The industry ministry will release the factory output data on June 30 at 8:50 a.m. (June 29 at 2350 GMT) and retail sales data on June 29 at 8:50 a.m. (June 28 at 2350 GMT).

Tokyo CPI and the jobs data are due on July 1 at 8:30 a.m. (June 30 at 2330 GMT).

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