Japan’s Factory Output Declines at Fastest Pace in Nearly Two Years

Industrial output in Japan declined at the fastest pace in almost two years as the US-China trade war continues to take a toll on Japan’s export-oriented economy. According to data released by the Japanese trade ministry, factory output contracted by 4.2% MoM in October.

The data came in worse than expected, with economists forecasting a 2.1% decline following a surprising growth by 1.7% in the previous month. The ministry also expects factory output to contract in November, by 1.5%, but things are expected to look better in December with factory output expected to rise by 1.1%.

The weakness in factory output was driven by a reduction in the manufacturing of passenger cars and car engines, as well as in machinery for general purposes and production. The weak economic data, along with several other weak economic data releases this week, is likely to increase the pressure on the government for a fiscal stimulus package to support economic recovery and boost growth.

This news release has failed to make much of an impact on the Japanese yen, with USD/JPY trading steady around 109.47 at the time of writing, after a brief spike.