TOKYO (Reuters) - Japan’s factory output is expected to have dropped for the first time in four months in January, a Reuters’ poll showed on Friday, but strong global demand and corporate profits will likely continue to support firms’ production activity.
Industrial production likely slipped 4.2 percent in January from the previous month, the poll of 19 economists found, after growing 2.9 percent in December.
“We expect the industrial production will retain its upward trend led by strong exports,” said an analyst at Mitsubishi Research Institute in the survey.
“But if global financial markets enter an adjustment phase and if that is prolonged, its adverse impact could spread to the real economy.”
Analysts are closely watching this year’s sharp appreciation in the yen to see if it erodes Japanese exporters’ competitiveness overseas and hurts their profits.
The trade ministry releases factory output data at 8:50 a.m. on Feb. 28, Wednesday Japan time (2350 GMT Tuesday).
Retail sales, which will be released at the same time with the factory output, are forecast to have grown 2.1 percent in January from a year earlier, slowing from 3.6 percent growth in December.
Highlighting continued tightening in Japan’s labor market, economists predict the jobless rate likely dipped to 2.7 percent in January while the jobs-to-applicants ratio was seen improving to 1.60, which would be its highest since January 1974.
Japanese policymakers hope that trend will soon translate into higher wages and stronger consumer spending, boosting inflation to the central banks’ elusive 2 percent target. But a recent Reuters poll showed more than half of Japanese firms do not plan to raise base pay in annual wages talks this year.
Tokyo area’s core consumer price index, which includes oil products but excludes fresh food prices, likely rose 0.8 percent in February from a year ago, led by energy costs and up only marginally from 0.7 percent in January.
The internal affairs ministry will announce the core CPI for Tokyo and jobs data at 8:30 a.m. on March 2, Friday (2330 GMT on Thursday).
The government started publishing the nationwide and Tokyo CPI data on different dates starting this month.
Data showed on Friday the nationwide core CPI index rose 0.9 percent in January from a year earlier.
Reporting by Kaori Kaneko; Editing by Kim Coghill