Japanese factory output rose at a slower pace than expected in May, government data showed on Monday, as sweeping US tariffs were threatening to derail the country's already fragile economic recovery.

Industrial output rose 0.5 percent in May from the previous month, data from the Ministry of Economy, Trade and Industry (METI) showed, less than a median market forecast for a 3.5 percent rise.

Manufacturers surveyed by METI expect seasonally adjusted output to rise 0.3 percent in June and fall 0.7 percent in July.

Tokyo is scrambling to find ways to get Washington to exempt its automakers from automobile industry-specific tariffs of 25 percent, which are dealing a heavy blow to the country's manufacturing sector. Japan also faces a 24 percent "reciprocal" tariff rate starting on July 9 unless it can negotiate a deal with Washington.

The hit from US tariffs could derail Japan's lacklustre economic recovery. Subdued private consumption already caused the world's fourth-largest economy to shrink in January-March, the first contraction in a year.

The US tariffs also complicate the Bank of Japan's endeavour to raise still-low interest rates and reduce a balance sheet that has ballooned to roughly the size of Japan's economy. (Reuters)