Industrial production fell 0.7 percent in August from the previous month as domestic demand turned sluggish in some sectors, according to data released Monday by trade ministry.
The Ministry of Economy, Trade and Industry, however, maintained its basic assessment in the preliminary report, saying output has shown “signs of picking up at a moderate pace.”
“A 0.7 percent drop is not a small decline on a single-month basis, but it was not large enough to downgrade our assessment,” a METI official said without stating whether the reading might affect the Cabinet’s decision Tuesday on the consumption tax hike next April.
The seasonally adjusted output index for factories and mines stood at 97.2 against the base of 100 for 2010.
By sector, output at general machinery makers fell 2.4 percent due to a decrease in reaction vessels used by chemical plants and steam turbines used by utilities.
The official said production of the two items, which are not produced constantly, likely declined after rising in July.
Output of transport equipment also fell, by 0.9 percent.
The bright spots included electric machinery, fabricated metal and pulp production.
The index of industrial shipments grew 0.4 percent to 96.0, while the index for inventories edged down 0.1 percent to 108.6.
Looking ahead, manufacturers polled by METI project that output will gain 5.2 percent in September on the back of firm domestic demand, and rise 2.5 percent in October, the official said.
Although production logged a drop in August, Takeshi Minami, chief economist at the Norinchukin Research Institute, said in a report that the index is on an upward trend, which is expected to continue through the end of fiscal 2013 in March.
But he also warned of risks from the widely expected consumption tax hike, saying production activities for cars and home appliances are likely to “largely decrease” in the first half of fiscal 2014 beginning in April.
August retail sales post 1.1% gain
Retail sales in August rose 1.1 percent from the previous year to ¥11.315 trillion, the first rise in two months, the Ministry of Economy, Trade and Industry said Monday.
Sales at wholesalers meanwhile edged up 0.6 percent to ¥26.153 trillion, climbing for four months in a row.
Combined, rose 0.7 percent to ¥37.468 trillion, also up for the fourth consecutive month.
In the retail sector, sales at large retailers, meaning the combined sales of department stores and so-called supermarkets, grew 0.9 percent to ¥1.582 trillion. On a same-store basis, sales fell 0.1 percent.
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