Japan factory output unexpectedly falls as exports of cars to U.S. slow

By Tetsushi Kajimoto

TOKYO (Reuters) - Japan's industrial output unexpectedly fell in January for the first time in six months, knocked by a slowdown in shipments of cars to the United States in a sign of an economy grappling for a sustainable recovery.

Data by the Ministry of Economy, Trade and Industry on Tuesday showed industrial output fell 0.8 percent in January, versus a median market forecast for a 0.3 percent increase and a revised 0.7 percent gain the previous month.

It was the sharpest month-on-month decline since May 2016.

The ministry said factories curbed production due to a slowdown in shipments of cars to the United States, where President Donald Trump has ratcheted up his criticism of major nations, including Japan, for stealing U.S. jobs.

Data this month showed Japan's exports to the U.S. fell 6.6 percent in January from a year ago.

Manufacturers surveyed by the ministry expect output to rise 3.5 percent in February but to decrease 5.0 percent in March.

Separate data by the ministry showed Japanese retail sales rose 1.0 percent in January from a year earlier, versus a median market forecast for a 0.9 percent gain.

That was the third straight month of annual gains, indicating a gradual pickup in consumer spending.

Tuesday's batch of data signalled that the world's third largest economy remained on a fragile footing, as uncertainty over Trump's economic policies cloud the global outlook. Trump's repeated pledges to pull back from free trade have raised concerns that protectionism will spread.

The ministry maintained its assessment on industrial output, saying production was picking up.

Japan's economy grew an annualised 1.0 percent in October-December as a weaker yen supported exports, while tepid private consumption and the risks of rising U.S. protectionism cast doubts over a sustainable recovery.

A Reuters poll of economists projected last week that Japan's economy will grow 1.2 percent in the fiscal year starting April and 1.0 percent for fiscal 2018, versus growth of 1.5 percent and 1.1 percent forecast by the central bank, respectively.

(Reporting by Tetsushi Kajimoto; Editing by Randy Fabi & Shri Navaratnam)