Economy

Decline in Japanese Factory Production and Drop in Nikkei Index

Decline in Japanese Factory Production and Drop in Nikkei Index

Government data released today, Friday, shows that Japanese factory production declined by 1.6% month-on-month in May, a drop larger than the market average forecast of a 1% decrease. According to the data, factories surveyed by the Ministry of Economy, Trade and Industry expect production to increase by 5.6% in June but decrease by 0.6% in July.

The Nikkei index opened down 0.50% at 33,068.36 points today, while the broader Topix index fell by 0.24%, opening at 2,290.85 points.

Additionally, government data today indicated that core consumer prices in Tokyo rose by 3.2% in June compared to a year earlier, exceeding the Bank of Japan's target level of 2% for the thirteenth consecutive month, highlighting the widening inflationary pressures.

Separate data showed production in factories declined more than expected in May, underscoring the risks facing the export-dependent economy as global demand prospects are affected by a strong monetary tightening cycle in the United States and weak growth in China. It is likely that inflation figures in Tokyo will maintain expectations that the Bank of Japan will gradually abandon its extensive stimulus measures this year. Tokyo's inflation data is considered an early indicator of trends in the rest of the country.

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