TOKYO (Reuters) -Japanese factory output rose at a slower pace than expected in May, government data showed on Monday, as sweeping U.S. tariffs were threatening to derail the country’s already fragile economic recovery.
Industrial output rose 0.5% in May from the previous month, data from the Ministry of Economy, Trade and Industry (METI) showed, less than a median market forecast for a 3.5% rise.
Manufacturers surveyed by METI expect seasonally adjusted output to rise 0.3% in June and fall 0.7% in July.
Tokyo is scrambling to find ways to get Washington to exempt its automakers from automobile industry-specific tariffs of 25%, which are dealing a heavy blow to the country’s manufacturing sector. Japan also faces a 24% “reciprocal” tariff rate starting on July 9 unless it can negotiate a deal with Washington.
The hit from U.S. tariffs could derail Japan’s lacklustre economic recovery. Subdued private consumption already caused the world’s fourth-largest economy to shrink in January-March, the first contraction in a year.
The U.S. tariffs also complicate the Bank of Japan’s endeavour to raise still-low interest rates and reduce a balance sheet that has ballooned to roughly the size of Japan’s economy.
(Reporting by Satoshi Sugiyama; Editing by Chang-Ran Kim and Tom Hogue)
Comments