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Business Times
30-06-2025
- Business
- Business Times
Japan factory output rises, but slower than expected as US tariffs threat looms
[TOKYO] Japanese factory output rose at a slower-than-expected pace in May, government data showed on Monday (Jun 30), as sweeping US tariffs were threatening to derail the country's already fragile economic recovery. Industrial output rose 0.5 per cent in May from the previous month, data from the Ministry of Economy, Trade and Industry (METI) showed, less than a median market forecast for a 3.5 per cent rise. Manufacturers surveyed by METI expect seasonally adjusted output to rise 0.3 per cent in June and fall 0.7 per cent in July. 'It's necessary to pay close attention to the worsening trend in sentiment (among manufacturers on) production planning,' a METI official said. Tokyo is scrambling to find ways to get Washington to exempt its automakers from automobile industry-specific tariffs of 25 per cent, which are severely impacting the country's manufacturing sector. Japan also faces a 24 per cent 'reciprocal' tariff rate starting on July nine unless it can negotiate a deal with Washington. Motor vehicle production went up by 2.5 per cent and shipments jumped 10.5 per cent in May from a month prior, the data showed. Some manufacturers had moved up their shipments because of the tariffs, the METI official said. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up The number of firms mentioning that the tariffs had an impact on their production or shipment increased slightly from April, the official said. 'Exports are likely to remain sluggish and production indices are expected to continue show weakness in response to the global economic slowdown,' said Yutaro Suzuki, an economist at Daiwa Securities. The hit from US tariffs could derail a lacklustre recovery in Japan's economy, the world's fourth largest. The economy shrank in January-to-March quarter, the first contraction in a year, due to subdued private consumption. The US tariffs also complicate the Bank of Japan's efforts to raise still-low interest rates and reduce a balance sheet that has ballooned to roughly the size of Japan's economy. 'The poor run of data will keep the central bank on hold for the time being,' said Stefan Angrick, head of Japan and Frontier markets Economics at Moody's Analytics. 'Until there's progress on US-Japan trade, Japan's manufacturers will remain in the doldrums, with few clear sources of support.' REUTERS
Time of India
30-06-2025
- Automotive
- Time of India
Japan factory output rises, but slower than expected as US tariffs threat looms
Japanese factory output experienced a slower-than-expected rise of 0.5% in May, raising concerns about the country's fragile economic recovery. U.S. tariffs on automobiles are significantly impacting Japan's manufacturing sector, prompting concerns about potential reciprocal tariffs. Economists anticipate continued weakness in exports and production due to the global economic slowdown, complicating the Bank of Japan's monetary policy efforts. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Japanese factory output rose at a slower-than-expected pace in May, government data showed on Monday, as sweeping U.S. tariffs were threatening to derail the country's already fragile economic output rose 0.5% in May from the previous month, data from the Ministry of Economy, Trade and Industry (METI) showed, less than a median market forecast for a 3.5% surveyed by METI expect seasonally adjusted output to rise 0.3% in June and fall 0.7% in July."It's necessary to pay close attention to the worsening trend in sentiment (among manufacturers on) production planning," a METI official is scrambling to find ways to get Washington to exempt its automakers from automobile industry-specific tariffs of 25%, which are severely impacting the country's manufacturing sector. Japan also faces a 24% "reciprocal" tariff rate starting on July 9 unless it can negotiate a deal with vehicle production went up by 2.5% and shipments jumped 10.5% in May from a month prior, the data showed. Some manufacturers had moved up their shipments because of the tariffs, the METI official number of firms mentioning that the tariffs had an impact on their production or shipment increased slightly from April, the official said."Exports are likely to remain sluggish and production indices are expected to continue show weakness in response to the global economic slowdown," said Yutaro Suzuki, an economist at Daiwa hit from U.S. tariffs could derail a lacklustre recovery in Japan's economy, the world's fourth largest. The economy shrank in January-March, the first contraction in a year, due to subdued private U.S. tariffs also complicate the Bank of Japan's efforts to raise still-low interest rates and reduce a balance sheet that has ballooned to roughly the size of Japan's economy."The poor run of data will keep the central bank on hold for the time being," said Stefan Angrick, head of Japan and Frontier markets Economics at Moody's Analytics . "Until there's progress on U.S.-Japan trade, Japan's manufacturers will remain in the doldrums, with few clear sources of support."
New Straits Times
30-06-2025
- Business
- New Straits Times
Japan factory output rises, but slower than expected as US tariffs threat looms
TOKYO: Japanese factory output rose at a slower-than-expected pace in May, government data showed on Monday, as sweeping US tariffs were threatening to derail the country's already fragile economic recovery. Industrial output rose 0.50 per cent in May from the previous month, data from the Ministry of Economy, Trade and Industry (METI) showed, less than a median market forecast for a 3.50 per cent rise. Manufacturers surveyed by METI expect seasonally adjusted output to rise 0.30 per cent in June and fall 0.70 per cent in July. "It's necessary to pay close attention to the worsening trend in sentiment (among manufacturers on) production planning," a METI official said. Tokyo is scrambling to find ways to get Washington to exempt its automakers from automobile industry-specific tariffs of 25 per cent, which are severely impacting the country's manufacturing sector. Japan also faces a 24 per cent "reciprocal" tariff rate starting on July 9 unless it can negotiate a deal with Washington. Motor vehicle production went up by 2.50 per cent and shipments jumped 10.50 per cent in May from a month prior, the data showed. Some manufacturers had moved up their shipments because of the tariffs, the METI official said. The number of firms mentioning that the tariffs had an impact on their production or shipment increased slightly from April, the official said. "Exports are likely to remain sluggish and production indices are expected to continue to show weakness in response to the global economic slowdown," said Yutaro Suzuki, an economist at Daiwa Securities. The hit from US tariffs could derail a lacklustre recovery in Japan's economy, the world's fourth largest. The economy shrank in January–March, the first contraction in a year, due to subdued private consumption. The US tariffs also complicate the Bank of Japan's efforts to raise still-low interest rates and reduce a balance sheet that has ballooned to roughly the size of Japan's economy. "The poor run of data will keep the central bank on hold for the time being," said Stefan Angrick, head of Japan and Frontier Markets Economics at Moody's Analytics. "Until there's progress on US-Japan trade, Japan's manufacturers will remain in the doldrums, with few clear sources of support."
France 24
20-06-2025
- Business
- France 24
Rice prices double in Japan as inflation accelerates
The vote for parliament's upper house, due next month, is crucial for Ishiba after public support for his government tumbled to its lowest level since he took office in October, partly due to frustration over the cost of living. In May, Japan's core inflation rate, which excludes volatile fresh food prices, hit 3.7 percent -- its highest level since January 2023 -- interior ministry data showed. The figure narrowly beat market expectations and was up from a 3.5 percent year-on-year rise logged in April. Rice was more than twice as expensive as a year previously -- despite the government releasing its emergency stockpile of the staple grain to try to bring its price down. A supply chain snarl-up has caused a shortage of rice in shops, with the grain's price up 101 percent on-year in May, compared to the eye-watering 98 percent rise in April. The government began releasing stockpiles in February in an attempt to drive down prices, something it has only previously done during disasters. Electricity bills were 11.3 percent higher in May, and gas fees rose 5.4 percent, according to Friday's data. Excluding energy and fresh food, Japan's consumer price index (CPI) rose 3.3 percent, compared to April's 3.0 percent. Cash handouts To help households combat inflation, Ishiba has pledged cash handouts of 20,000 yen ($139) for every citizen, and twice as much for children, ahead of the election. The 68-year-old leader's coalition was deprived of a majority in the powerful lower house in October as voters vented their anger at rising prices and political scandals. It was the worst election result in 15 years for the Liberal Democratic Party (LDP), which has governed Japan almost continuously since 1955. Earlier this week the Bank of Japan kept its interest rates unchanged and said it would taper its purchase of government bonds at a slower pace, as trade uncertainty threatens to weigh on the world's number four economy. "Policy flip-flops and delayed pass-through from producers to consumers mean inflation will slow only gradually in the coming months," said Stefan Angrick of Moody's Analytics. "This will keep a sustained pickup in real wages out of reach, and with it a meaningful uptick in consumption." Factors behind the rice shortages include an intensely hot and dry summer two years ago that damaged harvests nationwide. Since then some traders have been hoarding rice in a bid to boost their profits down the line, experts say. The issue was made worse by panic-buying last year prompted by a government warning about a potential "megaquake" that did not strike. Going forward, US tariffs are expected to weigh on Japan's growth, with economists predicting a slowdown ahead. Intensifying fighting between Iran and Israel was also adding pressure for energy prices to head north, posing a further risk to the Japanese economy.
CNBC
06-05-2025
- Business
- CNBC
Taiwan dollar eases after historic surge as officials deny currency talks with U.S.
Workers at a wet market count and return New Taiwan Dollar notes to customers, as Taiwan is expected to show positive GDP and economic growth, amid the covid-19 pandemic, in Taipei, Taiwan, 15 Aug 2021. Taiwanese dollar pulled back Tuesday after a historic surge that saw it clock multi-decade gains amid speculation about pressure from Washington on strengthening the local currency. It weakened over 3% against the U.S. dollar on Tuesday, after a meteoric 9% rally over the previous two trading days to hit three-year highs, and logging its sharpest daily gains Monday since at least 1981 according to LSEG data. Despite Tuesday's weakness, the Taiwanese dollar is still up over 8% this year against the greenback, while the U.S. dollar index is down by the same year to date. "We're seeing currency moves more [volatile] than what we saw during the Asian financial crisis era," said David Chao, global market strategist at Invesco. The recent dramatic upward swings in the currency were largely driven by exporters' rush to convert U.S. dollar reserves to the local currency as the U.S. dollar faltered, and life insurers' intensified hedging for their U.S. dollar debt holdings, experts said. Taiwanese life insurers are among Asia's largest holders of U.S. bonds and have been sitting on huge, underhedged U.S. dollar exposures, according to market analysts. Investors are closely monitoring the Taiwanese central bank as its "notable absence" has fanned speculation that the authorities were tolerating a stronger currency to win trade concessions from U.S., said Stefan Angrick, Head of Japan and Frontier Market Economics at Moody's Analytics. "The central bank has been unusually hands-off amid soaring forex volumes." Governor Yang Chin-long said at a press conference Monday that Taiwan's central bank had stepped in to curb what it deemed as "excessive" inflows while refuting claims that exchange rates were part of the U.S. trade negotiation. He did not elaborate on the nature of intervention. Despite official denial, foreign exchange rates might "quietly be on the table in broader U.S.-Taiwan trade conversation," Angrick said. President Donald Trump has advocated for a weaker greenback to boost U.S. export competitiveness. Analysts are also largely skeptical of any meaningful intervention from the central bank so far. The Taiwanese dollar has already reached the upper bound of the central bank's monitoring range, Invesco's Chao said, "If the central bank continues to step back, that may be the market's cue that a quiet currency realignment is underway." Tuesday's pullback was mostly due to the returning dollar demand by importers, according to Michael Wan, FX strategist at MUFG Bank, who believes the central bank has not intervened "very aggressively." Separately, Taiwan's financial supervisory commission has reportedly held meetings with some of the island's largest insurers to assess the risks a weaker greenback poses to their U.S. bond holdings. Three insurers said their risk-based capital remains within regulatory standards, according to Taipei-based Economic Daily News. Analysts see room for further gains in Asian currencies including Taiwanese dollar, betting that Trump tariffs could backfire on the American economy and that signs of progress in U.S.-China trade talks may revive trade flows in the region, supporting demand for Asian assets. "Momentum behind TWD strength may have legs if the broader de-escalation narrative holds, [and] if tariff implication on growth proves more manageable than feared," said Christopher Wong, currency strategist at OCBC Bank. "A more market-determined TWD may be helpful during trade talks." U.S. senior officials, including Treasury Secretary Scott Bessent, have recently sounded more upbeat about the prospects for reaching a trade deal with China. Beijing last week also signaled its openness to start trade negotiation with Washington. Besides the Taiwanese dollar, other Asian currencies have also rallied in recent weeks as the U.S. dollar has faltered. Chinese offshore yuan hit a six-month high of 7.1834 against the greenback on Monday, before paring some of the gains on Tuesday. "Currencies with the largest trade surpluses are more exposed to fears of a 'Plaza Accord 2.0,' and TWD is at the top of this list," said Ju Wang, head of Greater China FX & rates at BNP Paribas. Plaza Accord refers to an agreement signed in 1985 when G5 nations agreed to depreciate the U.S. dollar against the German mark and the Japanese yen to address trade imbalances. The Taiwan dollar's sharp rally piled on some pressure on the island's export-heavy tech sector, as a stronger local currency makes goods expensive for foreign buyers, reducing its competitiveness. Taiwan Semiconductor Manufacturing Co shares fell for a second day, losing nearly 2% on Tuesday. Every one percentage point of appreciation in the Taiwanese dollar is estimated to trim TSMC's operating margin by approximately 0.4 percentage point, said Brady Wang, Associate Director at Counterpoint Research. A stronger local currency reduces the value of its U.S. dollar-quoted revenue and most of TSMC's operations are in Taiwan. The world's largest contract chipmaker gave its second-quarter earnings forecast on the assumption of a USD/TWD exchange rate of 32.5. Stock chart icon US Dollar/Taiwan Dollar FX Spot Rate "Local chip and electronics manufacturers, which earn the bulk of their revenue in U.S. dollars, will feel the pinch as those earnings translate into fewer local dollars," said Angrick. But strong global chip demand may still be able to cushion the blow, Angrick added, noting the artificial intelligence boom and the push for advanced chips will continue to make Taiwan a critical supplier with few close competitors. Many exporters also appear to be well hedged. TSMC, for example, books both revenue and costs largely in dollars, while others rely on forex contracts or price adjustment clauses, said Phelix Lee, an equity analyst covering tech firms. Taiwan Semiconductor Manufacturing Co shares fell for a second day Tuesday, losing nearly 2%, while Hon Hai Precision Industry Co gained 2.5%.
