Japan limps out of recession with December production increase

Honda cars awaiting export at port in Yokohama, south of Tokyo, on Dec 18, 2014. Japan's industrial production snapped two quarters of decline, signalling that the world's third-largest economy may have limped out of recession. -- PHOTO: REUTERS
Honda cars awaiting export at port in Yokohama, south of Tokyo, on Dec 18, 2014. Japan's industrial production snapped two quarters of decline, signalling that the world's third-largest economy may have limped out of recession. -- PHOTO: REUTERS

TOKYO (BLOOMBERG) - Japan's industrial production snapped two quarters of decline, signaling the world's third-largest economy may have limped out of recession.

Output rose 1.8 per cent in the three months through December from the third quarter, the trade ministry said Friday. While inflation slowed in December, the labour market continued to tighten, with the ratio of jobs to applicants rising to the highest in more than two decades and the unemployment rate falling to the lowest since August 1997.

The improving job market reduces immediate pressure on central bank Governor Haruhiko Kuroda to add monetary stimulus as tumbling oil prices challenge his effort to stoke faster inflation. Output for December was lower-than-forecast by economists, indicating the recovery remains weak.

"The rebound in industrial production in December confirms that the economy started to recover last quarter," said Mr Marcel Thieliant, an economist at Capital Economics in Singapore. "This suggests that the economy finally returned to growth."

Production rose 1 per cent in December from the previous month, below a median forecast for a 1.2 per cent gain in a Bloomberg survey of economists.

Consumer prices excluding fresh food rose 2.5 per cent from a year earlier, less than the median projection of 2.6 per cent in a Bloomberg News survey. Stripped of the effect of sales-tax increase last April, core inflation - the Bank of Japan's key measure - was 0.5 per cent, below its 2 per cent target.