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Economy

Japan August industrial output falls amid weak exports, typhoons

Ministry downgraded economy's assessment to 'a weak tone' for first time in 5 months

Fanuc's main factory in Yamanashi Prefecture: Japan's exports to China have been falling as the trade war with the U.S. takes a toll on demand from the country's largest trading partner.

TOKYO (Kyodo) -- Japan's industrial output in August fell 1.2 percent from the previous month, dragged down by weak exports and powerful typhoons, government data showed Monday.

The seasonally adjusted index of production at factories and mines stood at 101.5 against the 2015 base of 100, the Ministry of Economy, Trade and Industry said in a preliminary report. The result followed a 1.3 percent increase in July.

The weak reading prompted the ministry to say industrial output has been "in a weak tone recently," a downgraded assessment from the "fluctuates indecisively" it had used for the past four months.

Exports to China have been falling as a drawn-out trade war with the United States takes a toll on demand from Japan's largest trading partner.

Japan has been locked in its own feud with South Korea over trade controls and wartime history, though so far the row has not had a significant impact on Japan's economy.

"There isn't much reason to be optimistic about production picking up right now," a ministry official said, adding that a pair of powerful typhoons that hit the southwestern Kyushu region in August also had an adverse effect.

Steel and nonferrous metals topped the list of industries that cut back output, followed by production machinery and automobiles. Those that increased output included the electronic components and chemical industries.

The index of industrial shipments slipped 1.4 percent to 101.1 while that of inventories was unchanged at 104.5.

Based on a poll of manufacturers, the ministry expects output to climb 1.9 percent in September and drop 0.5 percent in October.

"Looking ahead, we expect production to decrease modestly amid ongoing inventory adjustment pressures," said Kazuma Maeda, an analyst at Barclays Securities Japan Ltd.

"Overseas demand, though perhaps unlikely to experience an accelerated decline, appears likely to remain sluggish in the face of uncertainty around U.S.-China trade frictions."

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