Data for August from Japan shows that manufacturing output bucked analysts’ expectation and fell by 1.5%. Analysts had anticipated that manufacturing output in the world’s third largest economy would tick upwards by about 0.2%. On a positive note, Japan’s retail sales rose by 1.9% in August over the July level, but conversely, household spending fell back by 0.3%; its fifth straight month of contraction. Domestic consumption accounts for approximately 60% of Japanese economic production, so consumer spending and confidence is a critical issue for the economy.
Japan currently has its highest level of jobs available for 22 years and unemployment also eased in August from 3.8% down to 3.5%. However, in comments to the BBC, Marcel Thieliant of Capital Economics suggested that: "Today's data are unlikely to dispel concerns about the pace of recovery from last quarter's slump. We think the weakness in output since the beginning of the year will take its toll on the job market in coming months. Accordingly, we expect the unemployment rate to climb to 4% by the end of the year." Of course, many of Japan’s competing economies would kill to have an unemployment level as low as 4%.
Stocks in Asia have been falling, partially due to the weak Japanese data, but also because of tensions in Hong Kong over protests calling for a freer democratic choice of its leaders which have drawn large crowds of demonstrators. The general negative air has also not been helped by weak factory output from South Korea for August which dipped by 3.8% - its worst performance since 2008. Hong Kong’s Hang Seng index has lost more than 7% of its value during the last month.