2018.04.2701:15:00UTC+00Japan Factory Output Grew in March, Inventories Build Up

Japan's industrial output grew in March, government data showed. However, a huge rise in inventories of electronic parts imply that manufacturers may have to reduce production, which could weigh on economic expansion.

Japan's industrial output increased 1.2 percent in March from February, data showed, which followed a 2.0 percent rise in February.

Manufacturers surveyed by the Ministry of Economy, Trade and Industry expected output to grow 3.1 percent in April but drop 1.6 percent in May.

Inventories of electronic parts, such as semiconductors and flat panel displays, jumped 12.8 percent in March, versus a 1.7 percent increase in the previous month.

Separate data showed retail sales rose less than expected in a blow to hopes for higher consumer spending. Demand for labor, however, increased in March as companies continue to struggle to find workers.

Retail sales increased 1.0 percent in March from the previous year.

The jobs-to-applicants ratio, a measure of labor demand, increased to 1.59 in March from 1.58 to match the highest level seen in four decades. Japan's low birth rate and rapidly ageing population has led to a shortage of workers.

The unemployment rate was steady at 2.5 percent in March, near the lowest in 24 years.