Japanese factory production in April collapses, worrying sign for the economy

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TOKYO (Reuters) – Japanese factories recorded a sharp drop in output in April as China’s COVID-19-related shutdowns and wider supply disruptions weighed heavily on manufacturers, clouding the outlook for trade-dependent economy.

Separate data showed retail sales posted the biggest increase in nearly a year as consumers increased spending after the government eased pandemic measures, withstanding pressure from price hikes. wider prices that threaten to hurt domestic demand.

Factory output fell 1.3% in April from the previous month, official data showed on Tuesday, on sharp declines in output of items such as electronic parts and production machinery.

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It was the first drop in three months and much smaller than the 0.2% decline economists expected in a Reuters poll.

The data comes a day after Toyota Motor Corp, the world’s biggest automaker by sales, missed its global production target for April after output fell more than 9% year-on-year.

Toyota’s production slump last month came after the Japanese automaker slashed its global production plan for June on Friday and signaled the possibility of cutting its annual production plan by 9.7 million vehicles.

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As activity in Japan’s service sector recovers as the pandemic subsides, the country’s manufacturing sector has come under pressure from supply disruptions and war-induced rising material prices. from Russia to Ukraine.

Manufacturers surveyed by the Ministry of Economy, Trade and Industry (METI) expected production to return to growth in May, gaining 4.8%, followed by an 8. 9% in June.

Separate data showed retail sales rose 2.9% in April from a year earlier, marking their biggest gain since May 2021. That was bigger than the market’s median forecast for an increase by 2.6%.

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The unemployment rate stood at 2.5% from 2.6% the previous month, while an index measuring the availability of jobs was 1.23.

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