Japanese retail sales posted a faster-than-expected decline in the year to July, down for the first time in eight months, as a boost from stimulus-driven consumption tapers off and sluggish exports cloud the outlook for the world's third biggest economy.
The 0.8 percent decrease in retail sales in July was bigger than a median market forecast for a 0.2 percent decline. It followed a meagre 0.2 percent gain in June after robust sales seen earlier this year.
Japan's government cut its assessment for the export-reliant economy on Tuesday for the first time since October 2011, as slowing global growth weighed on exports and factory output, and threatened recovery prospects.
Deceleration in the US and China, on top of Europe's debt crisis, caused the downgrade, the government said, warning that further global slowdown and sharp market swings posed risks to the world's third largest economy.
Japan's exports slumped by their most in six months in July, dragged down by collapsing shipments to debt-ridden Europe and a sharp fall in sales to China, fuelling worries that fragile recovery in the world's third biggest economy could stall.
The 8.1 percent annual fall was far deeper than economists' median forecast of a 2.9 percent drop. And a 25.1 percent plunge in exports to the European Union, the biggest such drop since October 2009, saw Japan post a record trade deficit with the region.
Japan's economy grew at a slower-than-expected annualised rate of 1.4 percent in April-June, adding to worries over the global outlook, as consumer spending flagged following a rebound from last year's earthquake and tsunami disasters.
Japan's economic growth slowed in the second quarter as the eurozone crisis hurt exports and domestic consumption remained subdued.
Gross domestic product grew by 0.3 percent during the period from the previous three months. That is down from 1 percent growth in the first quarter.
Compared to the same period last year, the economy expanded by 1.4 percent.
The number of corporate bankruptcies in Japan last month declined 5.0 percent from a year earlier to 1,026, a credit research agency said Wednesday.
But liabilities left by the business failures more than tripled to JPY724.1 billion (USD9.21b) – the highest monthly figure so far this year – due largely to the sizable debts left behind by Sanko Steamship Co. and consumer credit firm Clavis Co., according to Tokyo Shoko Research.
Japanese wholesale prices fell 2.1 percent in the year to July, Bank of Japan data showed on Friday.
The fall compared with a median forecast of a 1.6 percent decline in a Reuters poll and followed a 1.3 percent drop in the previous month.
The economic recovery appears to be "pausing," the Japanese government said on Monday, downgrading its basic assessment of the benchmark composite index, the first such move since the economy was unsettled by the March 2011 mega-quake and tsunami.
Consumer prices in Japan fell 0.2 percent year-on-year in June, a decrease for the second consecutive month, the internal affairs ministry said on Friday. The reading for the core index, which excludes volatile food items, was slightly worse than a drop of some 0.1 percent economists had expected.
Japan's exports dipped in June, the first drop in four months, as slowdown in key markets including Europe and China, hurt demand.
Exports dipped 2.3 percent from a year earlier, compared with a 10 percent jump in the previous month.
Shipments to the European Union declined by 21.3 percent, while those to China were down by 7.3 percent.