Japan January factory output to rise for first time in three months

Analysts expect the economy in the current quarter to shrink as a local state of emergency in some areas, including Tokyo, to contain coronavirus cases hit businesses and consumers

  
 A man walks past a factory at the Keihin industrial zone in Kawasaki, south of Tokyo, Japan, August 18, 2016. REUTERS/Kim Kyung-Hoon/File Photo. Image used for illustrative purpose.

A man walks past a factory at the Keihin industrial zone in Kawasaki, south of Tokyo, Japan, August 18, 2016. REUTERS/Kim Kyung-Hoon/File Photo. Image used for illustrative purpose.

REUTERS

TOKYO  - Japan's industrial production likely grew for the first time in three months in January as manufacturing activity picked up globally, a Reuters poll found on Friday, offering a glimmer of hope for an economy battered by the coronavirus pandemic.

But retail sales, a key gauge of consumer spending, probably contracted for a second straight month, suggesting the pandemic continued to dampen consumption, the poll showed.

Analysts expect the economy in the current quarter to shrink as a local state of emergency in some areas, including Tokyo, to contain coronavirus cases hit businesses and consumers.

Japan's factory output was projected to have risen 4.0% in January from the previous month, the poll of 18 economists showed on Friday, rebounding from a revised 1.0% fall in December.

"Factory output of production machineries and electronic parts and devices likely grew as exports of capital goods and semiconductors increased," said Daichi Kawabata, economist at Mizuho Research Institute.

Analysts also said front-loading of production before the Lunar New Year holidays also helped boost Japan's factory output.

The poll estimated retail sales in January declined 2.6% from a year earlier after a revised 0.2% drop in December.

Japan's renewed restrictions to contain COVID-19 cases likely slashed sales at department stores and super markets as consumers avoided going out to shop, analysts said.

The trade ministry will release factory output and retail sales data at 8:50 a.m. on Friday (2350 GMT Thursday)

The poll also found Tokyo's core consumer price (CPI) index, which includes oil products but excludes fresh food prices, slipped 0.4% in February from a year earlier as energy costs eased.  

(Reporting by Kaori Kaneko; Editing by Jacqueline Wong) ((kaori.kaneko@thomsonreuters.com; +81-3-4563-2733;))

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