Japan: January production in China is expected to fall at the fastest pace in a year in China – Reuters Poll

TOKYO (Reuters) – Japan's industrial output in January is expected to have fallen at the fastest pace in a year, as exports to China fell due to a deadly trade war against the United States.

Growth in retail sales is expected to slow only slightly in January, while the unemployment rate remains unchanged, a sign that domestic demand is continuing at the beginning of the year.

Sluggish industrial production could raise fears of a slowdown in economic growth in Japan, as companies cut production due to a sharp drop in Chinese demand for heavy equipment.

"Exports of semiconductor manufacturing equipment and telecommunications equipment weaken and the focus is on China," said Asuka Sakamoto, economist at Mizuho Research Institute.

"We expect further declines in Japan's industrial production."

The United States and China are fighting over the details of the agreements to end their trade war just a week before Washington's deadline for an agreement, which would lead to higher US tariffs.

Exorbitant tariffs between the United States and China, the two largest economies in the world, have already slowed down international trade.

Japan is threatened by the fact that many of its manufacturers are focusing on the manufacture of heavy equipment, electronics and auto parts for other finished product manufacturers in China.

Industrial production is expected to have fallen 2.5% in January from the previous month, according to the median estimate of 16 economists in a Reuters poll.

This would mark the third consecutive month of contraction and the largest decline since January 2018.

The companies surveyed for industrial production will also give their production forecasts for February and March, which will be closely monitored to determine the extent of the damage caused by the trade war.

Retail sales are expected to have risen 1.1% year-over-year in January, which would be a little slower than the 1.3% increase recorded the previous month.

The Ministry of Commerce will release industrial production and retail sales data at 8:50 am Japan time on Thursday, February 28 (23:50 GMT, February 27).

Separate data should show that the unemployment rate in Japan remained stable at 2.4% in January and that the ratio of jobs to candidates remained unchanged at 1.63, according to the Reuters poll.

The Ministry of Home Affairs will publish the employment data at 8:30 am Japan time on Friday, 1 March (23:50 GMT, 28 February).

Japanese exports recorded their largest decline in more than two years, while shipments to China fell, fueling concerns over slowing global demand, data released this week showed.

The decline in exports came after a key indicator of Japan's capital expenditure showing that orders for machinery abroad fell at most in more than a decade in December, and that the business climate hit its all-time low. level in two years.

Japanese policymakers are increasingly concerned about growth prospects if the United States and China do not resolve their trade disputes.

(Report by Stanley White, edited by Sam Holmes)