Japan Retail Sales Rise 0.8% In August

Household spending has also been weighed down by slow wage growth.

Factory output fell 0.5 percent month-on-month, trade ministry data showed on Wednesday, well short of a 1.0 percent increase expected by economists in a Reuters poll.

Falling prices, weak consumer spending and a slowdown in key export market China are weighing on Japanese businesses, which are holding back investment and building up inventories in warehouses. “Factory output looks likely to fall for a second straight quarter in July-September”, a trade ministry official told a media briefing.

Looking further ahead, firms indicated that production will rise 0.1% in September before accelerating to 4.4% in October.

Sales at large-scale retailers rose 1.8% on year, after adjustment for the change in the number of stores, according to data released by the Ministry of Economy, Trade and Industry. Economists had projected a 1 percent gain while the government had estimated a 2.8 percent expansion. Analysts say the central bank won’t be able to stay its hand for too much longer.

“The disappointing data perhaps strengthens the case for more policy stimulus in Japan“, said analysts at Deutsche Bank.

The central bank argues that core consumer inflation will accelerate to its 2 percent goal by September 2016.