Japan industrial output forecast to rebound

TOKYOJapanese industrial production is forecast to rebound this month after a drop in September, while the labour market remained the tightest in decades and household spending fell modestly.

Highlights of the data industrial production fell 1.1% (forecast -1.6%) in September from August. Production is forecast to rise 4.7% this month and fall 0.9% in November. The unemployment rate remained at 2.8% (estimate 2.8%). The job-to-applicant ratio was unchanged at 1.52 (estimate 1.53), the highest since the mid-1970s.

The latest reading of Japan’s economy comes just a few hours ahead of the conclusion of a Bank of Japan (BoJ) policy meeting. While inflation remains well below the BoJ’s 2% target, the central bank has pointed to the labour market and improving outlook gap as factors expected to put further up- ward pressure on prices. All 43 economists surveyed by Bloomberg expect the BoJ to leave its monetary easing programme unchanged.

“The overall trend is one of gradual improvement,” said Toru Suehiro, senior market economist at Mizuho Securities Co. “Domestic demand is unlikely to propel fourth- quarter (4Q) industrial pro- duction, but as long as ex- ports keep growing it should remain stable.” “The gross domestic product growth rate is likely to slow down in the 3Q to around 1%, but that isn’t too bad” given Japan’s low potential growth rate, said Takeshi Minami, chief economist at Norinchukin Research Institute. — Bloomberg