TOKYO :Japan’s factory output rose at a better than expected pace last month, driven by increases in production machinery and electronics parts, but a slowdown in retail sales pointed to the growing strains for an economy facing rising external risks.
Japanese companies are increasingly worried President Donald Trump’s protectionist policies would trigger a broader global slowdown, with automakers at home bracing for the effects of U.S. tariffs.
Industrial production rose 2.5 per cent in February from the previous month when it declined 1.1 per cent, and was just ahead of a median market forecast for a 2.3 per cent rise, the Ministry of Economy, Trade and Industry (METI) data showed on Monday.
The output of production machinery, including chipmaking equipment, increased 8.2 per cent from the previous month, while the production of electronic parts and devices increased 10.1 per cent, according to the METI.
Manufacturers surveyed by METI expect seasonally adjusted output to increase 0.6 per cent in March and edge up 0.1 per cent in April.
Separate data showed Japanese retail sales rose 1.4 per cent in February from a year earlier, less than a median market forecast for a 2.0 per cent rise. They rose 4.4 per cent last month.
The relatively subdued domestic consumption points to a difficult year ahead for the world’s fourth-largest economy, especially as Trump’s blitz of tariffs against trading partner countries drag on business investment and confidence.
Trump’s announcement of a 25 per cent additional tariff on auto imports is particularly worrisome for policymakers in Japan given its reliance on auto exports to the U.S.
Automobiles made up 28.3 per cent of Japan’s total exports to the United States in 2024, the biggest ratio among all items, according to Ministry of Finance data.
Production of motor vehicles rose 0.2 per cent in February from the previous month, according to the METI.
