Japan's industrial output growth slowed in May on US tariffs

Bloomberg reports that Japan’s industrial production grew less than expected in May as US tariffs weighed on the nation’s exports. 

Factory output rose 0.5% compared to April, with economists projecting a gain of 3.5%. At the same time, industrial production declined 1.8% from a year earlier. Monthly output is expected to increase 0.3% in June and to contract 0.7% in July, the news agency reports. 

Production machinery led the monthly gain. Car output rose 2.5%, with production of other transportation vehicles falling 16.3%. Output for steel and non-ferrous metals increased 1.9%. 

It is now unclear whether the US baseline tariff on Japanese goods will return to 24% from the current 10%. Hideo Kumano of Dai-ichi Life Research Institute notes that trade talks between the two countries are likely to drag on. Japanese companies are responding by lowering prices in an attempt to maintain production volume. Such a move weighs on both corporate profits and employee benefits. That, in turn, could hit consumption.