JAPAN’S economy offered a mixed reading yesterday, with retail sales for May beating expectations while industrial production disappointed.

    Industrial output fell 2.2 percent month on month in May, worse than a Reuters poll forecast for a 0.8 percent decline. That spurred the government to say industrial production is stagnating and cut its forecast, according to Reuters.

    “The plunge in industrial production in May points to a contraction in GDP this quarter,” Marcel Thieliant, a Japan economist at Capital Economics, said in a note yesterday. “The Bank of Japan (BOJ) will have to step up the pace of easing before too long.”

    But Japan’s consumers have stepped up to the plate, with retail sales rising 3 percent year on year in May, beating a forecast for a 2.3 percent rise from a Reuters poll. That’s consistent with data released last week showing household expenditures climbed more than expected in May.

    Japan’s policymakers have struggled to kick start the economy after decades of deflation, with the BOJ launching a massive easing program in 2013 as part of “Abenomics,” Japanese Prime Minister Shinzo Abe’s plan to return the country to growth.

    But after a consumption tax hike to 8 percent from 5 percent in April of 2014, the economy got clobbered when consumers stopped spending, forcing the government to postpone a second sales tax initially due this October.

    Developments in the Greek debt crisis and the Asian financial market reaction so far have yet to alarm the BOJ enough to consider offering emergency liquidity, officials familiar with its thinking say.

    If the deepening crisis triggers global market turmoil and risks hurting Japan’s banking system, the BOJ’s first response would be to offer massive, short-term funds in emergency market operations to calm investors, they said yesterday.(SD-Agencies)