Japan June industrial output seen rebounding from pandemic slump: Reuters poll

(C) Reuters. FILE PHOTO: An employee wearing a protective face mask and face guard works on the automobile assembly line during the outbreak of the coronavirus disease (COVID-19) at the factory of Mitsubishi Fuso Truck and Bus Corp. in Kawasaki

By Tetsushi Kajimoto

TOKYO (Reuters) – Japan’s industrial output likely rebounded in June from the near double-digit decline in the previous month, in a sign factory activity may have bottomed out from the deep slump caused by the coronavirus pandemic, a Reuters poll of 13 economists showed.

While a relatively small rebound in factory output would point to a modest economic recovery ahead, the jobless rate was expected to creep up from decades-low levels, underscoring a more prolonged impact from the health crisis.

Ministry of Economy, Trade and Industry (METI) data out at 0850 JST July 31 (2350 GMT July 30) will probably show factory output grew 1.2% month-on-month in June, rebounding from a 8.9% decline in May caused by slumping output of cars and production machinery, the poll showed. An increase would snap four straight months of declines in factory output.

Although global demand for cars and other durable goods may have bottomed out as many countries have re-opened their economies, a slow rebound raised the spectre of a jobless recovery, which would undermine private consumption that accounts for more than half of the economy, analysts say.

Separate government data out 0830 JST July 31 (2330 GMT July 30) will likely show the jobless rate rose to 3.1% in June, from 2.9% seen in the previous month, the poll showed.

The jobs-to-applicants ratio, or availability of jobs, probably worsened to 1.16 in June, from 1.2 seen in May, meaning that less than six jobs were available per five job-seekers.

Worsening job conditions would hit households hard, keeping consumers from loosening purse strings as they have just emerged from lockdowns implemented through late May to contain the virus’ spread.

Retail sales were seen falling 6.5% in the year to June, following a 12.5% drop the previous month, the poll showed. The data is due out at 0850 JST July 30 (2350 GMT July 29).

Japan has not seen the kind of rapid spread of the coronavirus that has killed tens of thousands in other countries. But a recent surge in new cases in Tokyo and other cities has sounded alarm bells for a country that had thought it had the virus under control.

In a sign a growing number of households cannot afford to buy a home, housing starts probably fell 13.5% in the year to June, worse than the prior month’s 12.3% decline, the poll showed. The housing data is due out at 1400 JST July 31 (0500 GMT).