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As reported by Reuters, Japan’s Industrial Output lagged in October as frictions from the US-China trade war continue to spill over into neighboring countries.

Key quotes

“The 1.1 percent decline in output was more than the median estimate for a 0.3 percent decline and follows a 0.2 percent increase in the previous month.

Japan exports a large volumes of electronic parts and equipment to China, which are used to make goods destined for the United States, so Japan’s economic growth could weaken if Washington and Beijing remain at loggerheads over trade.

Output fell in September due to a 2.5 percent decline in production of cars and car parts, data from the trade ministry showed on Wednesday. Production of robots and machines used to make flat panel displays also fell 1.4 percent.

Economists have expressed concern that high inventories of electronic parts are a sign of weak demand, which could cause manufacturers of such goods to cut future production.

Manufacturers surveyed by the trade ministry expect output to rise 6.0 percent in October but decline 0.8 percent in November.

These forecasts are in doubt after exports fell in September for the first time since 2016 as shipments to the United States and China declined, likely impeding third quarter economic growth and adding to concerns about the broadening impact of an escalating Sino-U.S. trade war.”