Japan’s Industrial Production Stalls

Japan’s industrial output stalled in September as private consumption and household spending remained strained and overseas demand continued to wane, government data indicated Monday.

According to a preliminary report by the Ministry of Economy, Trade and Industry, the index of output at factories and mines stood at 97.8 against the base of 100 in 2010, Xinhua reported.

The reading equates to an unchanged 1.3% increase logged in August, with the figure for the July-September period logging a mediocre 1.1% rise from the previous quarter, the trade ministry said.

The ministry also said of the manufacturers it polled, expectations are now for a mere 1.1% increase in output in October followed by a slightly more optimistic 2.1% rise in November.

The data set, specifically, showed that the index of industrial shipments rose 1.1% to 95.7 in the recording period, but inventories retreated 0.4% to 111.0.

While the ministry evidently sees an uptick in factory production in the coming months, market economists remain somewhat more circumspect, believing that key drivers are lacking and hence the incentive for producers to increase their output remains elusive, which will have a negative knock-on effect on the nation’s gross domestic product.

“Looking at the (industrial) production report, I think GDP will lack strength and post a small gain, which would increase calls for stimulus measures to boost growth,” Toru Suehiro, a senior market economist at Mizuho Securities Co. was quoted as saying.

“There is no sector that can drive growth in the long term and the focus now will shift to GDP for July-September,” Suehiro said.

With the trade ministry also saying Monday that retail sales had slumped in the same recording period, falling 1.9% from a year earlier and at a bigger margin that median market expectations, in twine with core consumer prices falling 0.5% this month from a year earlier, marking the seventh straight month of declines, pressure is now on the government and the central bank to take proactive measures.

However, the exigent state of Japan’s economy and the failings of numerous installations of the prime minister’s “Abenomics” brand of economic policies, against a backdrop of a rapidly aging society and shrinking population, threaten to further batter Japan’s economy, if sustainable solutions aren’t actualized forthwith and beyond the government’s rhetoric.

To this end, Bank of Japan Governor Haruhiko Kuroda has expressed his frustration with the government of Prime Minister Shinzo Abe for its ineffectual endeavors to lift the economy out of its decades-long malaise.