Japan's industrial output growth slowed more than forecast in March, while retail sales continued its downtrend, vindicating the actions of the central bank, which recently announced massive stimulus measures aimed at boosting growth.
Industrial production rose 0.2 percent month-on-month in March decelerating from the 0.6 percent increase in February, preliminary data from the Ministry of Trade and Industry revealed Tuesday. Economists expected a more modest slowdown in output growth to 0.4 percent. Nevertheless, production was up for a fourth consecutive month.
Annually, output declined for a tenth consecutive month in March. Production fell 7.3 percent year-on-year in March, following a 10.5 percent decline in February.
The ministry also reported that retail sales fell 0.3 percent year-on-year in March compared with expectations for 0.4 percent growth. This followed a 2.2 percent drop in February and a 1.1 percent fall in January.
Commercial sales recorded a 1.2 percent decline in March and wholesale trade dropped 1.5 percent. However, large-scale retail stores recorded 3.5 percent growth in turnover during the month.
Left aside the disappointing run of data, the prospects for the Japanese economy look fairly good, with a sliding yen looking set to revive the export sector.
The Bank of Japan launched a massive stimulus plan this month with an aim to end deflation in the economy that has been a drag on growth for more than a decade. The central bank upgraded its forecast for consumer prices and economic growth last week.
The BoJ is of the view that the domestic economy may return to a moderate recovery path around mid-2013, supported by resilient domestic demand and growth in overseas economies. The bank now expects gross domestic product to rose 2.9 percent in fiscal 2013 and by 1.4 percent in fiscal 2014.
However, the central bank has warned there is a risk that even if the growth rates of overseas economies rise as expected, Japan's exports and industrial production might not be able to fully enjoy the benefits of higher growth in the case of a relative delay in the recovery of business fixed investment worldwide.
Separately, the Ministry of Internal Affairs and Communications said Tuesday that household spending in Japan surged 5.2 percent year-on-year in March. This was faster than the 0.8 percent increase in February and the 1.6 percent growth expected by economists. These figures are often interpreted with caution as they can be distorted by purchases of big-ticket items.
The ministry said Japan's seasonally adjusted unemployment rate fell to 4.1 percent in March from 4.3 percent in February. This was expected to fall to 4.2 percent.
The number of unemployed persons was 2.8 million in March, a decrease of 8.8 percent from last year. Meanwhile, the number of employed individuals rose 0.5 percent.
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