Factory output across Japan declined at a faster pace than forecast during the month of April after the government declared a state of emergency to contain the spread of the coronavirus pandemic across the country. According to data released by the government, factory output contracted by 9.1% in April, the biggest drop ever recorded since at least 2013.

Economists had previously expected factory output to shrink by 5.1% for the month. The severe drop was driven by a severe reduction in output among iron and steel manufacturers in the wake of falling external demand as most countries around the world went into a state of lockdown owing to the pandemic.

Meanwhile, domestic demand across Japan has also been affected severely due to the pandemic-led conditions. Retail sales fell by 13.7% YoY during April – falling at the fastest rate since March 1998.

Most of the slump in retail sales was caused by the shutdown of services sectors firms, including restaurants even as demand for non-essential items like clothing and motor vehicles collapsed due to the crisis. Domestic demand in Japan has been under strain for several months even before the coronavirus hit, after the government had hiked the sales tax last year.