TOKYO: Japan's economy slowed markedly last month as consumer spending dropped and factory output ran out of steam, data showed Friday, underscoring concerns about the state of the country's recovery.
The weak figures come after Japan suffered its biggest quarterly contraction since the 2011 quake-tsunami disaster, as an April sales tax rise slammed the brakes on growth in the world's number three economy.
While deflation remained at bay, consumer price growth stalled in July from a month earlier, and the fresh figures were sure to heap pressure on the Bank of Japan to usher in another round of monetary easing to kickstart growth, analysts said.
The recent data will also force policymakers to take a hard look at whether to raise sales taxes again, after the April 1 hike -- seen as crucial to shrinking Japan's mammoth debt -- hurt economic growth.
"Today's data on industrial production and retail sales show that the economy continued to stagnate at the start of the third quarter," Marcel Thieliant from Capital Economics said in a note.
"What's more, inflation moderated in July and is set to decline further, which should increase the pressure on policymakers to do more."
The latest data showed Japan's industrial production inched up a tepid 0.2 percent in July on-month after tumbling 3.4 percent in June.
While the fresh reading marked a modest rebound, it was well below market expectations of a 1.2 percent rise in factory output last month.
Spending among the nation's households dropped 5.9 percent from a year earlier -- falling for the fourth month in a row -- while the unemployment rate inched up to 3.8 percent in July from 3.7 percent in June.
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