Japan March Factory Output Up

Japan’s industrial output rose more than expected in March, government data showed on Friday, but a large increase in inventories of electronic parts suggests manufacturers may have to cut production, hurting economic growth.
Separate data showed retail sales rose less than expected in a blow to hopes for higher consumer spending. Demand for labor, however, increased in March as companies continue to struggle to find workers, Nikkei reported.
Japan’s industrial output rose 1.2% in March from February, the data showed, beating the median forecast for a 0.5% increase and followed a 2% rise in February.
“The headline figure is better than expected, but I am not confident about the outlook,” said Hiroaki Muto, economist at Tokai Tokyo Research Center. “High levels of inventories are flashing signs that we have entered a correction phase. Manufacturing in other economies is starting to weaken. We shouldn’t take this lightly.”
Manufacturers surveyed by the Ministry of Economy, Trade and Industry expected output to rise 3.1% in April but fall 1.6% in May. Inventories of electronic parts, such as semiconductors and flat panel displays, surged 12.8% in March, versus a 1.7% increase in the previous month. Retail sales rose 1% in March from a year earlier, less than a median market forecast for a 1.7% annual increase.
The jobs-to-applicants ratio, a measure of labor demand, rose to 1.59 in March from 1.58 to match the highest level seen in four decades. Japan’s low birth rate and rapidly ageing population has led to a shortage of workers. The jobless rate held steady at 2.5% in March, near the lowest in 24 years.