–Industrial Output Rebounds Strongly on Eased Parts Supply Constraints
–Retail Sales Up Sharply in Reaction to Slump a Year Ago, Waning Covid Drag
–Unemployment Ticks Up as More People Quit for Better Spots, Begin Job Search
By Max Sato
(MaceNews) – The Japanese economy is showing resilience amid easing supply bottlenecks and waning effects of the pandemic, with domestic demand set to lead a top growth rate among the Group of Seven major nations this year despite slowing global demand and jitters over bank failures in the U.S. and Europe.
Japan’s industrial production posted a stronger-than-expected 4.5% rebound on the month in February, thanks to easing parts supply constraints for the auto industry, after slumping at a faster pace of 5.3% in January, when automakers suffered parts shortages and many other industries were hit by weaker global and domestic demand, preliminary data released Friday by the Ministry of Economy, Trade and Industry showed.
The drag from suspended shipments during the lunar new year holidays in some parts of Asia in January appeared to have eased in February. From a year earlier, however, factory output marked a fourth straight decline, but the 0.6% dip was smaller than expected.
The METI’s survey of producers indicated that output is likely to post a slight 0.3% drop on the month in March (adjusted for an upward bias) before marking a solid 4.4% rebound in April.
The ministry maintained its view after downgrading it recently, saying industrial output “has weakened.” Previously, it had said, production was “picking up gradually but also showing weakness in some areas.”
The International Monetary Fund has forecast that Japan’s economy will grow 1.8% in 2023, above its projection of 1.4% for the U.S. and 1.2% for major economies.
Retail sales posted their 12th straight year-on-year increase in February, with the pace of increase at 6.6% above forecast and accelerating from January’s 5.0% gain, led by continued recovery in department store sales, a pickup in new vehicle sales, rising costs for food and beverages, data released Friday by the Ministry of Economy, Trade and Industry showed. It was partly due to the 0.9% drop seen in February 2022.
In the month-to-month comparison, retail sales showed some resiliency, recording a 1.4% gain in February, coming in stronger than the consensus call of a 0.9% drop.
The ministry upgraded its assessment for the second straight month, saying retail sales are “on an uptrend,” instead of “on a gradual uptrend.” Previously, it had said retail sales were “picking up.” It noted that the three-month moving average in seasonally adjusted retail sales rose 0.8% in February for the eighth straight gain after rising 0.3% in the previous two months.
Consumer spending on goods has been solid while expenditures on services have been supported by the government’s domestic travel discount program, which was launched in October and resumed in January on a smaller scale after a brief suspension during the yearend and New Year holidays.
Domestic demand is likely to be supported by consumer spending on goods and services as the economy continues to reopen, but the purchasing power of many households has been reduced by rising costs for daily necessities and falling real wages.
The monthly Economy Watchers Survey, which was conducted by the Cabinet Office from Feb. 25 to Feb. 28 and released March 8, indicated that confidence picked up sharply in February as the economy continued reopening and anti-Covid public health rules were scheduled to be eased further in March. The outlook was mixed, however, as some firms found it hard to fully pass higher producer costs onto customers.
Japanese payrolls posted their seventh straight year-over-year growth in February as hotels and restaurants continued hiring more workers amid a consumption shift to services from goods, while the unemployment rate rose to 2.6% after improving unexpectedly to a three-year low of 2.4% in January, data released Friday by the Ministry of Internal Affairs and Communications showed.
Compared to the previous month, more people quit their jobs to look for other openings or began looking for work, adding to the upward pressure on unemployment that came from a second straight monthly increase in the number of people who either lost their positions or retired.
The government has resumed its domestic travel discount program on a smaller scale after a brief suspension during the yearend and new year holidays. It lifted most of its Covid border restrictions in October to allow more visitors from overseas, which has been supporting the tourism industry.
Compared to a year earlier, the number of employed rose at a slower pace of 90,000 to an unadjusted 66.67 million in February after surging by an above-trend 430,000 in January and rising 100,000 in December.
The number of unemployed fell just 60,000 on the year to an unadjusted 1.74 million in February, marking the 20th straight month of year-over-year decline after falling at a high pace of 210,000 the previous month. It has drifted down from a pandemic peak of 2.17 million in October 2020 and is just above 1.60 million at the initial phase of the pandemic in early 2020.