Factory Output in Japan Dipped Below Expectation in December

Factory output in Japan shrank for the first time in December amid decline in machinery production outweighing rise in autos.

Retail sales rose for their straight third month of year-on-year gains in December despite COVID-19 resurgence. Japan faced record infection this month driven by omicron which is expected to hit consumer sentiment.

Monday’s data showed factory output lost 0.1% in December compared to previous month. The growth in pulled down by output of general-purpose and production machinery, including chip-making equipment and engines used in manufacturing.

That meant that output, which fell faster than the 0.8% decline forecast in a Reuters poll of economists, dropped for the first time in three months.

“Output especially fell among capital goods makers, probably due to the strong impact from the chip shortages,” said Takeshi Minami, chief economist at Norinchukin Research Institute, told Retuers.

“It suggests its impact is widening even though the focus has been on the car industry.”