Japan’s industrial output rebounded in April, though retail sales grew at a slower pace from the previous month, suggesting that both domestic and external demand could come under severe pressure in the event of a protracted Sino-US trade war.

The rise in industrial output was also mainly because Japanese companies front-loaded production before a 10-day public holiday from late April to early May.

Excluding this factor, analysts caution that it is too early to turn optimistic on Japan’s factory output as hopes fade for a quick resolution to the trade row between the United States and China, the world’s two largest economies.

Industrial production rose 0.6 per cent in April from the previous month, more than the median estimate for a 0.2 per cent increase and following a 0.6 per cent decline in March.

Output was pushed up by an increase in production of cars, aeroplane parts, and machines used to make flat panel displays, the data showed.

However, in a more worrying sign, inventories of semiconductors and electronic parts rose at the fastest pace in seven months, suggesting weak demand in that sector will also weigh on output in the future.

Manufacturers surveyed by the Ministry of Economy, Trade and Industry expect output to rise 5.6 per cent in May but decline 4.2 per cent in June, the data showed.

Tension between Washington and Beijing escalated sharply earlier this month after US. President Donald Trump’s administration accused China of having “reneged” on its previous promises to make structural changes to its economic practices.

Washington later slapped additional tariffs of up to 25 per cent on $200 billion of Chinese goods, prompting Beijing to retaliate.

A slowdown in China hurts Japan because many of its manufactures rely on selling heavy machinery and electronic parts to factories in the world’s second-biggest economy.

Japan’s economy in the first quarter unexpectedly accelerated but the surprise expansion was mostly caused by imports declining faster than exports, showing both external and domestic demand were weak.

Separate data showed retail sales rose 0.5 per cent in April from a year ago, less than the median estimate for a 0.8 per cent annual increase.

However, that was a slowdown from a 1.0 per cent annual increase in the previous month as shoppers reduced spending on clothes and autos, suggesting some consumers may be turning cautious.

Tokyo’s core consumer prices (CPI) index, which includes oil products but excludes fresh food prices, rose 1.1 per cent in May from a year earlier, compared with a 1.3 per cent increase in April.

A slowdown in electricity and gas price rises capped gains in the index, data showed.

The jobless rate improved to 2.4 per cent in April from 2.5 per cent in March, and the jobs-to-applicants ratio was steady at 1.63.