Japan's factory output slips again in August, defying forecasts

Japan's industrial production declined in August, falling for a second consecutive month and confounding market expectations of an increase, government data showed on Wednesday.

Output at factories and mines contracted 1.7% from July, according to the Ministry of Economy, Trade and Industry. A poll of economists had pointed to a 1.7% month-on-month rise.

The decline was driven largely by the transport equipment sector, where motor vehicle production dropped 6.8% from the previous month after an earthquake and a typhoon disrupted manufacturing operations. Output of general-purpose and business-oriented machinery also fell 6%.

Despite the weak reading, manufacturers surveyed by the ministry expect output to rebound. They project a seasonally adjusted increase of 3.2% in September and further growth of 3.1% in October.

The production figures are among the indicators the Bank of Japan is likely to weigh as it assesses whether economic conditions support an interest rate increase in the near term.