Japan's industrial output and household spending fall

A worker in a Japanese factory Japan's manufacturers have seen a decline in demand from key markets

Related Stories

Japan has posted weaker-than-expected economic data, underlining the challenges the government faces as it tries to revive the country's economy.

Industrial output fell 3.3% in June, from the previous month. Compared with the same month a year ago it fell 4.8%.

Meanwhile, household spending declined 0.4% from a year earlier. Analysts had expected growth of 1.0%.

Japan has been trying to boost domestic consumption in an attempt to revive its stagnant economy.

Analysts said that while the data was weak and highlighted the challenges faced by the government, it was not a cause for immediate concern.

"This is a minor blip, the overall trend is that of a recovery in Japan's economy," Masaaki Kanno, Japan chief economist with JP Morgan Securities told the BBC.

Domestic boost

Start Quote

I think there is no change in the trend that production is expected to stay on a steady recovery ”

End Quote Yoshiki Shinke Dai-Ichi Life Research Institute

Prime Minister Shinzo Abe's government has unveiled a series of aggressive measures to boost domestic demand, which has been hurt in part by years of falling prices or deflation.

While falling consumer prices may sound good, they tend to hurt the economy as consumers and businesses put off big purchases in the hope of getting a better deal later on.

Policymakers and analysts have said that ending the deflationary cycle is key to reviving Japan's economy.

Earlier this year, the central bank doubled its inflation target to 2% in an attempt to boost consumer prices and spending.

There have been some indications that the steps are having an impact as data released last week showed that consumer prices rose in June, for the first time in more than a year.

Temporary decline?

The decline in Japan's factory output was also bigger than forecast.

However, analysts said that the fall was likely to be temporary and predicted that production would jump in the coming months,

"Although June data for factory output was weak, manufacturers' forecasts for July are strong," said Yoshiki Shinke, chief economist at Dai-Ichi Life Research Institute.

"I think there is no change in the trend that production is expected to stay on a steady recovery as June trade data was good, benefits from the yen's weakness are appearing and domestic demand is solid."

According to a survey conducted by Japan's Ministry of Economy, Trade, and Industry (METI), manufacturers expect production to rise by 6.5% in July.

More on This Story

Related Stories

The BBC is not responsible for the content of external Internet sites

Features & Analysis

  • Man holding lipWitch hunt

    The country where a blasphemy charge is a death sentence


  • Espresso cupNews quiz

    Which city serves the strongest cup of coffee?


  • Irvine WelshDeaf ears

    Five famous Scots who can't vote in the Scottish referendum


  • Electric chairReturn of 'the chair'

    Five people talk about their roles in Tennessee's execution debate


From BBC Capital

Programmes

  • A cargo shipThe Travel Show Watch

    It is not cheap or glamorous - so why are people choosing to travel by cargo ship?

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.