Workers assemble vehicles on the production line at a factory in Suzuka, Mie, Japan. (Photographer: Kiyoshi Ota/Bloomberg)

Japan Industrial Output Rebounds in Sign of Further Recovery

(Bloomberg) -- Japan’s industrial production rebounded in June, as global demand continued to support the nation’s economic recovery.

Highlights of Data 

  • Industrial production increased 1.6 percent (forecast +1.5 percent) in June from May, when it fell 3.6 percent.
  • The decline in May partly reflected Golden Week holidays, when many factories cut back output.
  • Production rose 1.9% in the second quarter 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 percent in July and rise 3.6 percent in August.
  • Measured year on year, production rose 4.9 percent (forecast +4.8 percent).

Key Takeaways

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, signaling that both output and consumption were reasonably healthy in the second quarter. Still, stronger gains in wages and inflation are needed to put the economic recovery onto a firmer footing.

Japan Industrial Output Rebounds in Sign of Further Recovery

Economist Views

  • “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,” Kuwahara said.
  • "The upshot is that the economy is on track for the seventh consecutive quarter of growth, which would be the longest expansion in two decades," Marcel Thieliant, senior Japan economist at Capital Economics, said in a note after the results were released.