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Japan cuts output view on China pandemic curbs in June report

Japan’s government cut its view on factory output for the first time in seven months in June due to the hit to manufacturers from China’s hard-handed coronavirus pandemic response.

China’s strict coronavirus lockdowns in cities like Shanghai had a major impact on Japanese manufacturers’ output by disrupting supplies of industrial parts and hitting Chinese demand for memory cards and sensors.

In a monthly assessment approved by the cabinet on Monday, the government said a pickup in output appeared to be stalling, a downgrade on its previous description saying it showed signs of picking up.

Even though Shanghai removed full-city lockdowns at the start of the month, uncertainty about the area’s economic recovery is likely to weigh on output by Japanese manufacturers.

Despite the output downgrade, the government maintained its assessment of the overall economy, while warning various outlook risks remained.

“The economy is showing signs of picking up,” the government said in its June economic report.

Looking ahead, attention needed to be paid to downside risks stemming from fluctuations in financial and capital markets amid worries about surging prices of raw material, supply constraints and conditions in Ukraine and China, it said.

The government raised its assessment of imports from the previous month, saying they had stopped falling as the sharp decline in shipments from China appeared to be slowing.

It also giving a more favourable view of housing investment on an improvement in rental housing construction.
Source: Reuters (Reporting by Daniel Leussink; Editing by Sam Holmes)

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