Japan's Manufacturing Output Falls as US Tariffs Bite, Inflation Slows

Japan's factory output slumped in July as US tariffs bite and a leading indicator of nationwide inflation slowed, data showed on Aug. 29, complicating the central bank's decision on the next rate hike timing.

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TOKYO -

While Japan's jobless rate hit a multi-year low in July due to a tight job market, retail sales rose much less than expected in a sign that rising living costs were weighing on consumption.

Signs of persistent inflationary pressure and downside risks to growth highlight the challenge the Bank of Japan (BOJ) faces in determining how soon to resume interest rate hikes.

"Sticky inflation is eroding wage gains, keeping consumer spending weak," said Dr. Stefan Angrick, head of Japan and frontier market economics at Moody's Analytics.

"The poor run of data will keep the Bank of Japan on hold until the year's end. Japan's manufacturers will stay stuck in the doldrums, with few clear sources of support."