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Last Updated: Wednesday, 28 February 2007, 08:53 GMT
Industrial output weak in Japan
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Consumer demand has been sluggish in recent months
Industrial output fell sharply in Japan in January, raising fresh concerns about the sustainability of the country's economic turnaround.

Production fell 1.5% on a monthly basis, the steepest decline for three years, while separate figures showed a 0.8% fall in retail sales in January.

Policymakers raised interest rates to 0.5% this month, suggesting their faith in the recent economic recovery.

But shares fell 3% on Tokyo on concerns about the Chinese and US economies.

Japanese output has been affected by sluggish domestic demand in recent months and concerns about the US economy, a major export market for its firms.

'Growing uncertainty'

Despite being the worst monthly output performance since February 2004, the figures were marginally better than analysts had expected.

The Japanese economy grew a robust 4.8% in the final three months of last year, but many analysts are worried that it is now entering a softer phase.

A separate survey on the manufacturing sector published on Wednesday showed activity had slipped close to a two-year low.

"Uncertainty on the outlook for the economy is growing after today's number and especially after last night's plunges in share prices," said Takeshi Minami, chief economist at the Norinchukin Research Institute.

Japan sees account surplus shrink
14 Feb 07 |  Business
Japan ups interest rates to 0.5%
21 Feb 07 |  Business
Japanese consumer spending slips
30 Jan 07 |  Business

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