Industrial production dropped 0.1 percent from the previous
month — the first decline in three months, the government said Tuesday.
Shipments overseas fell 1.7 percent.
Lower output from automakers such as Toyota Motor Corp. and
Honda Motor Co. dragged the index south, reflecting softening overseas demand.
Factories also made less machinery used for semiconductors and flat-panel
displays, according to the Ministry of Economy, Trade and Industry.
"Production momentum is slowing, and with the index
coming in below expectation for a fourth month in a row, it seems to be doing
so sooner than expected," said Goldman Sachs economist Chiwoong Lee in a
note to clients.
The government predicts output to rebound 0.4 percent in
June and 1 percent in July — notably smaller gains than in March and April.
The results point toward weaker growth in the world's second
biggest economy, which has relied on a rebound in exports to underpin recovery.
Brisk overseas demand, particularly from Asia, drove annualized economic growth
of 5 percent in the January-March quarter.
But that momentum is starting to cool as governments roll
back stimulus measures and focus instead on controlling spending and debt. Data
last week showed that while export growth is still robust, it has slowed every
month since February.
World leaders who gathered for the Group of 20 meeting in
Toronto pledged Sunday to slash government deficits in most industrialized
nations in half by 2013, despite warnings from US President Barack Obama and
others that overly aggressive austerity measures could derail the global
recovery.
Japan's new Prime Minister Naoto Kan, who has made debt
reduction a priority, has a more immediate concern. With upper house elections
looming on July 11, he must convince voters that his party can also figure out
a way to fuel growth and fight deflation.
Separate data Tuesday showed that the country's seasonally
adjusted jobless rate climbed to 5.2 percent, up from 5.1 percent in April and
the highest level since December.
The number of jobless stood at 3.47 million, which is
unchanged from the previous year, according to the Ministry of Internal Affairs
and Communications. Those with jobs fell 0.7 percent to 62.95 million.
The export boom has been slow to translate into sustained
improvements for workers and families, which has persistently dampened domestic
demand and pushed prices down. Government incentives for cars and
energy-efficient household appliance gave consumption a much-needed boost
earlier, but the effects now appear to be fading.
Household spending in May fell a real 0.7 percent from a
year earlier as incomes retreated, the government said in another report.
Average monthly household income fell a real 2.4 percent from a year earlier to
421,413 yen ($4,714).
A picture of the mood in corporate Japan will emerge
Thursday when the central bank releases its closely watched "Tankan"
survey of business sentiment.
