Japan industrial output beats expectations in March, retail sales disappoint

Investing.com-- Japanese industrial production grew more than expected in March, preliminary data showed on Tuesday, indicating some relief in the country;s manufacturing sector after two straight months of declines.

But retail sales grew substantially less than expected, signaling that consumer spending still remained weak despite a pick-up in wages. The reading potentially heralded softer inflation in the coming months. 

Industrial production rose 3.8% month-on-month in March, more than expectations for a rise of 3.4% and recovering from the 0.6% drop seen in the prior month. The reading came amid some recovery in car manufacturing, which makes up a bulk of Japan’s industrial output. 

Retail sales grew 1.2% year-on-year in March, less than half as much as expectations of 2.5% and slowing substantially from the 4.7% bounce seen in February. 

The reading pointed to sluggish consumer spending despite expectations of higher wages, factoring into a middling outlook for inflation in the coming months. Inflation readings for March and April had underwhelmed, casting doubts over the Bank of Japan’s forecasts of sticky inflation.