Japan's factory output rises 2% in May, validates 'Abenomics'

TOKYO (AFP) - Japan's factory output rose by a stronger-than-expected 2 per cent on month in May, official data showed on Friday, offering up some validation for Tokyo's efforts to stoke the world's third-largest economy. The market had expected a rise of about 0.2 per cent.

A corporate survey released with the data showed companies expect output to fall 2.4 per cent this month and then increase 3.3 per cent next month.

Separate figures also released on Friday showed the jobless rate was unchanged at 4.1 per cent in May, while consumer prices were flat as the government ramps up a bid to reverse years of deflation which have crimped growth.

Friday's data comes after earlier figures showed that Japan logged another trade deficit in May on surging import costs, but exports were also on the rise.

This week, Japanese Prime Minister Shinzo Abe said he will spend the next three years rebuilding the nation's fragile economy, having banished the gloom that covered Japan when he came to power.

Since taking office in December, MR Abe has launched an economic policy blitz dubbed "Abenomics", which blends massive monetary easing, big fiscal spending and a series of reforms aimed at freeing up businesses.

Japan's sleep-walking economy has been given a jolt by the moves, with the yen shedding some of its export-sapping strength and the stock market surging.

Mr Abe faces elections in the Upper House of Parliament next month that are widely expected to see a resounding victory that would solidify his power base.