JAPAN’S industrial output shrank more than expected in August in the latest warning that the economy and its manufacturers are facing intensifying pressure amid a bitter Sino-U.S. trade war.

Retail sales, however, expanded at a faster-than-expected pace, signalling strength in private spending ahead of October’s nationwide sales tax increase.

Industrial output fell 1.2 percent in August, government data showed, dropping at a faster pace than a median market forecast for a 0.5 percent decline and almost completely reversing July’s 1.3 percent increase.

Output was weighed down by reduced production of iron and steel products, factory production equipment and cars, offsetting a gain in electronic parts and chemicals, the data showed.

Manufacturers surveyed by the trade ministry expect output to rise 1.9 percent in September, but fall 0.5 percent in October.

Yesterday’s output data paint a bleak picture for Japan’s export-reliant economy, underlining broadening stress across the manufacturing sector from slowing global growth, though service-sector activity remains firm as it is less at risk from weakness in global trade.

“The lack of export growth because of the global economic slowdown is having a major impact,” said Takumi Tsunoda, senior economist at Shinkin Central Bank Research Institute. “The sales tax will be raised in October, so the deceleration of the economy will likely become stronger.” (SD-Agencies)