August industrial output drops in Japan and South Korea
Slowdowns in China and Europe blamed for the more than expected decline in August production, fuelling need for monetary easing
Japanese and South Korean industrial production fell more than economists estimated last month as slowdowns in China and Europe weighed on exports, building the case for more monetary easing.
Japan's output fell 1.3 per cent from July, the biggest decline in three months, a Trade Ministry report said. Korean production slid 0.7 per cent, partly on a strike at Hyundai Motor.
An increasing risk that Japan's economy will shrink this quarter and the failure of central bank loosening to dislodge deflation may increase pressure for officials to ease at either of two meetings next month.
Yesterday's data adds to China's weakest industrial production growth in more than two years in highlighting the failure of policy support to reverse a slowdown across Asia.
"I'm convinced we'll see a contraction in Japan's [gross domestic product] this quarter because consumption, exports and private investment are falling," said Masamichi Adachi, a senior economist at JP Morgan Securities and a former central bank official. "Prices in Japan are falling because the economy is weak."
The Nikkei-225 Index fell 0.89 per cent yesterday.
A report due today from HSBC Holdings and Markit Economics may indicate that Chinese manufacturing contracted this month for an 11th consecutive month.