TOKYO (BLOOMBERG) – Japan’s industrial production dropped again in May even as a nationwide state of emergency was lifted, showing the severity of the pandemic’s impact on the export-reliant manufacturing sector.
Factory output fell 8.4 per cent from April, the economy ministry reported on Tuesday (June 30). Production slid from the prior month for a fourth time in a row, something that hasn’t happened since 2012. Economists had forecast a 5.9 per cent decline.
A separate report showed the unemployment rate rose to the highest level in three years.
Tuesday’s production report suggests that even as the lifting of restrictions allows Japan’s factories to restart, weak global demand means there’s less work to do. Recent rises in infection rates in the US, Japan’s biggest overseas market last year, makes a speedy recovery unlikely.
Domestic spending could also stay depressed amid the fear of a second wave of virus cases and more potential job losses. Japan’s unemployment rate is still much lower than elsewhere, but the headline figure doesn’t take into account millions of workers who have been forced to take leave during the pandemic.
Some government aid has been slow to reach people and companies in need, adding another risk. Some analysts expect more fiscal stimulus if the impact of the pandemic drags on.