TOKYO: Japan's factory output saw a surprise drop and household spending kept falling in August, data showed Tuesday, fanning fears about the impact of April's sales tax rise on the economy.
The figures will add to worries that the country's tentative recovery has been knocked off kilter by the increased levy and strengthen the hand of those arguing against another hike next year.
Industrial production shrank 1.5 percent month-on-month in August after rising 0.4 percent in July, the ministry of economy, trade and industry said.
The latest reading also missed a market median forecast of a 0.3 percent rise.
Separate data from the internal affairs ministry showed household spending in August fell a steeper-than-expected 4.7 percent from a year earlier.
Spending has now fallen for five straight months since the government pushed up sales tax from 5.0 percent to 8.0 percent.
The latest fall was sharper than the market forecast of a 3.6 percent drop and came after a 5.9 percent plunge in July.
Yet more weak data are likely to force policymakers to take a hard look at the state of the economy.
The government and central bank leaders have argued the world's third largest economy remains broadly on a recovery path and has withstood a temporary shock from the tax rise.
But that position is getting harder to defend, say observers.
"There is no sign at all of a V-shaped economic recovery previously forecast by the government," said Norinchukin Research Institute chief economist Takeshi Minami.
Comments
Comments are closed.