TSX gains after CPI shows US inflation rose 3%
Investing.com-- Japanese industrial production fell more than expected in August after a similar decline last month as U.S. trade tariffs weighed on exports, while retail sales dropped unexpectedly to their lowest in four years.
Industrial production fell 1.2% month-on-month in August, government data showed on Tuesday. The print was weaker than expectations for a 0.7% contraction, and held steady from a 1.2% decline in July.
Retail sales fell 1.1% year-on-year, marking their first decline since Feb 2022, and their biggest fall since Aug 2021. The print came in against expectations of a 1% rise, and reversed from a 0.4% rise in July.
The weakness comes despite confirmation of a new U.S.–Japan trade deal last month that lowered planned duties on Japanese cars and parts to a baseline 15%, down from initial proposals of 25%. The revised tariffs still represent a drag on automakers, with manufacturers seeing thinner margins and weaker U.S. demand.
The unexpected weakness in retail sales data signaled that Japanese private consumption, a key driver of the economy, remained subdued due to headwinds from sticky inflation and economic uncertainty.
Private spending has been a major driver of Japanese inflation in recent years, and was also a motivating factor for the Bank of Japan to hike interest rates.
The BOJ held its interest rates steady at 0.5% earlier this month, but two board members dissented, calling for a quarter-point hike, signaling the central bank’s hawkish tilt.