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Investing.com-- Japanese industrial production fell more than expected in July after an unexpected rise last month, with producers seeing weakness in local and overseas demand from U.S. trade tariffs.
Industrial production fell 1.7% month-on-month in July, government data showed on Friday. The print was weaker than expectations for a 1.1% contraction, and reversed from a 2.1% growth in June.
Retail sales only grew marginally -- by 0.3% -- significantly lower than the 1.5% anticipated, and fell from a 1.9% rise in June.
The decline in industrial production came after a surprise growth seen in June, as Japan’s factories showed resilience against increased U.S. tariffs. The U.S. and Japan agreed to a trade deal earlier in June, which will see Japan subject to a lower, 15% tariff.
Thursday’s strong 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.