Japan's factory output rises for third straight month

TOKYO Japan's factories increased output for a third consecutive month in August, as the manufacturing sector showed resilience in the face of high energy and material costs and worries about a global economic slowdown.

Prime Minister Fumio Kishida ordered his cabinet ministers to compile an economic stimulus package that will include measures to alleviate the burden faced by businesses and households due to rising prices.

The US and other major trading partners are worried about the recession risks in the world, which would make Japan more dependent on domestic consumption for growth.

In August factory output increased by 2.7 per cent, from a month earlier in the day, extending rises from the previous two months, official data showed earlier in the day.

Retail sales increased sharply for a sixth month in August, while the latest jobs data showed tighter labour market conditions.

As far as August data, the manufacturers' production activity was firm and production was on an upward trend, said Koya Miyamae, senior economist at SMBC Nikko Securities.

There is a possibility that production may stagnate in October-December due to the global economy slowing down. The increase, which was much stronger than the median market forecast for a 0.2 per cent gain predicted by economists in a Reuters poll, was lifted by firmer output in machinery and steel and non-ferrous metals.

It helped offset a 6.3 per cent slump in electronics parts and devices output and a decline in motor vehicle production, which swung into contraction after posting double-digit gains in June and July.

Toyota Motor Corp, the world's largest automaker by sales, reported a month-on-month decline in Japanese output in August, although global production rose.

The drop in electronic parts and devices production was due to falling output of memory chips on a weaker smartphone and personal computer demand, a government official said.

The government's plan to promote wage hikes and regional revitalisation will also include measures to promote wage hikes and regional revitalisation, Chief Cabinet Secretary Hirokazu Matsuno said at a news conference after Prime Minister Kishida's announcement.

Tokyo is expected to fund the steps by a new supplementary budget, a move that would mark the latest episode in ramping up fiscal spending.

Matsuno said that we wanted to come up with an extra budget quickly after drawing up the economic package at the end of October.

Despite worries about the negative impact of surging prices, Japan's economy was still expected to grow as consumers were likely to keep going out, according to Miyamae.

Retail sales increased more than expected, up 4.1 per cent from a year earlier in the month, compared to the median forecast for a 2.8 per cent gain in a Reuters poll.

The sales at medicine and toiletry stores, as well as fuel, general merchandise, and fabrics apparel and accessories, helped to boost retail revenues.

In August, the seasonally adjusted jobless rate was 2.5 per cent compared with the previous month's 2.6 per cent, while the availability of jobs was at 1.32, its highest since March 2020.