Japan's Industrial Output Decline

TOKYO (Reuters) – Japan's industrial output likely slipped in August, weighed down by weak overseas demand and local factory suspensions due to a typhoon, factors that could dent momentum in overall economic recovery, a Reuters poll showed on Friday.

Industrial output was expected to fall 0.9% in August from the previous month, according to a poll of 18 analysts, following a 3.1% jump in July.

"Industrial production has been seesawing as the overseas economy continues to grow at a lower rate, exports of high-tech products have not grown as much as expected, and there are also automobiles' certification scandals," said Takeshi Minami, chief economist at Norinchukin Research Institute.

Automobile exports were likely sluggish, while both domestic and foreign demand for machine tools were weak, Minami added.

Typhoon Shanshan, which struck Japan in late August, might have contributed to downward pressure in factory output, according to an analyst at SCB Research Institute. The typhoon caused factories, including Toyota (NYSE:TM) and semiconductor firm Renesas, to temporarily halt their operations.

Japan's economy grew at a slightly slower but still solid pace than initially reported in the second quarter, hindered by downward revisions in corporate and household spending.

Analysts expect the economy to continue improving, supported by rising wages and personal and corporate spending, though risks remain from external factors such as a potential slowdown in the U.S. economy and sluggish Chinese demand. China has announced a slew of stimulus measures this week, but analysts note it will take time to revive activity.

Meanwhile, retail sales were expected to rise 2.3% in August from a year earlier after growing 2.6% in July. Economists attributed this increase to strong demand for clothing and preserved food following the typhoon and an earthquake.

Japan's jobless rate was expected to dip slightly to 2.6% in August from 2.7% in July, and the jobs-to-applicants ratio likely remained at 1.24 last month, according to the poll.

The trade ministry will announce both factory output and retail sales at 8:50 a.m. on Monday, Sept. 30 (2350 GMT Sunday), while the jobs data will be released at 8:30 a.m. on Tuesday, Oct. 1.