TOKYO (Reuters) - Japan's factory output declined in November, weighed by falls in auto production and clouding the outlook for the export-reliant economy.
Industrial production fell 0.9% in November from the previous month, data from the Ministry of Economy, Trade and Industry (METI) showed on Thursday. The reading was better than the median market forecast for a 1.6% drop.
Motor vehicle production, which has underpinned industrial output, fell 2.5% in November from the prior month due to slowdowns in the manufacturing of small cars and engines, a METI official said.
Output of electrical machinery and information and communication electronics equipment also fell 3.5%, due to sluggish demand in semiconductor and integrated-circuit testing equipment, the official said.
Manufacturers surveyed by the industry ministry expect seasonally adjusted output to increase 6.0% in December and decline 7.2% in January. METI maintained its assessment of industrial output as "seesawing".
"We'll continue to monitor the impact of the global economic downturn and rising prices," the official said.
Furthermore, a production halt at Toyota Motor's (7203.T) small car unit Daihatsu due to a safety scandal is expected to add downward pressure on output from January onward, the METI official said.
The small car specialist has suspended output in Japan until the end of next month, the company said this week.
"Automobile-related production has recovered steadily (this year) thanks to easing supply constraints, but the risk of production cuts will need to be watched carefully in the near term," said Kota Suzuki, an economist at Daiwa Securities.
Regarding the outlook on semiconductor production, the METI official expected a gradual recovery.
Separate data showed Japanese retail sales expanded 5.3% in November from a year earlier. That was roughly in line with the median market forecast for a 5.0% gain and marked the 21st consecutive month of expansion since March 2022.
Compared with the previous month, retail sales grew 1.0% in November, following a 1.7% decline in October, the data showed.