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Japan's November factory output seen falling, retail sales slowing - Reuters poll

Japan's November factory output seen falling, retail sales slowing - Reuters poll
FILE PHOTO: A worker cycles near a factory at the Keihin industrial zone in Kawasaki, Japan February 28, 2017. REUTERS/Issei Kato   -   Copyright  Issei Kato(Reuters)
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TOKYO (Reuters) – Japan’s factory output is expected to show more volatility with a Reuters poll forecasting a slump for November from a strong bounce the previous month, and the outlook was anything but encouraging given easing global growth and a Sino-U.S. trade dispute.

Industrial output was seen falling 1.9 percent in November from the previous month, which would be the fastest decline since January this year, the poll of 16 economists found.

It grew 2.9 percent in October for the quickest month-on-month gain since 2015, which itself came after a contraction in September as natural disasters forced some factories to halt operations.

“Catching-up on production after damages caused by natural disasters are coming to an end. And exports of autos and semiconductor related products are also weakening,” said Yusuke Koshiyama, analyst at Mizuho Research Institute.

Analysts project factory output to rebound in the fourth quarter after typhoons and a huge earthquake caused supply constraints and shrank production 1.3 percent in July-September from the previous quarter.

But slowing external demand and trade frictions point to potential trouble ahead for the export-reliant economy.

The trade ministry will publish the factory output data at 8:50 am. Dec. 28, Japan time (2350 GMT Dec. 27).

Retail sales, due at the same time as the factory output report, are forecast to have risen 2.2 percent in November from a year earlier, the poll showed, slowing from a revised 3.6 percent growth in October.

Still, it would be the 13th straight month of gains.

“Sales of auto rose, inbound demand remained strong and gasoline prices year-on-year stayed high, which helped retail sales,” Mizuho’s Koshiyama said.

The poll also found Tokyo’s core consumer price index (CPI), which includes oil products but excludes fresh food prices, rose 0.9 percent in December from a year earlier, down from 1.0 percent in November.

The Tokyo index is available a month before nationwide core CPI, which for November showed prices still well behind the Bank of Japan’s 2 percent inflation target.

“Although the pace of price gains in electricity and city gas accelerated, prices of oil related items slowed down,” said Koya Miyamae, senior economist at SMBC Nikko Securities.

On the labour market front, the poll forecast the nation’s jobless rate at 2.4 percent in November, unchanged from October, with the jobs-to-applicants ratio seen improving to 1.63 from 1.62 in October.

The internal affairs office will announce Tokyo core CPI and job data at 8:30 a.m. on Friday (2350 GMT on Thursday).

(Reporting by Kaori Kaneko; Editing by Shri Navaratnam)

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