Japan industrial output rebounds in June

TOKYO • Japan’s industrial production rebounded in June, as global demand continued to support the nation’s economic recovery.

Industrial production increased 1.6% (forecast +1.5%) in June from May, when it fell 3.6%. The decline in May partly reflected Golden Week holidays, when many factories cut back output. Production rose 1.9% in the second-quarter (2Q) from the previous quarter, the biggest gain since the beginning of 2014. Passenger cars, auto parts were biggest contributors in June. Production is forecast to rise 0.8% in July and rise 3.6% in August. Measured year-on-year, production rose 4.9% (forecast +4.8%).

A pick-up in global demand and a weak yen have helped Japanese exporters, lifting the nation’s economy

to the longest run of expansion in a decade. Reports last week showed that household spending rose in June for the first time in more than a year, while retail sales gained for an eighth month, signalling that both output and consumption were reasonably healthy in the 2Q. Still, stronger gains in wages and inflation are needed to put the economic recovery onto a firmer footing.

“Demand for information technology investment and a recovery in global capital investment are supporting production in Japan,” said Masaki Kuwahara, senior economist at Nomura Securities Co in Tokyo. “The economy itself is stronger than I had expected…Production will likely remain strong throughout the summer.” — Bloomberg