Japan’s industrial production rebounds, signalling continued modest recovery
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A return of overseas tourists has been boosting consumption in Japan compared with the previous year.
PHOTO: ST FILE
TOKYO - Japan’s industrial production rebounded in June, capping a quarterly gain that suggests a modest recovery continued in the second quarter.
Factory output rose 2 per cent from May, rebounding from that month and led by increases in cars and electronic devices, according to the Industry Ministry on Monday.
Economists had forecast a 2.4 per cent advance.
The gauge rose 1.3 per cent in the second quarter from the first one.
The data points to an ongoing recovery in the world’s third-largest economy helped by healing supply chains, despite slowdown signs abroad.
The nation’s trade balance swung to its first surplus since July 2021 in June, with exports holding up while imports slid on the back of falling fuel prices.
“The recent pick-up in auto production is a positive factor,” said Dai-Ichi Life Research Institute economist Chisato Oshiba. “Car exports are also recovering, so I expect the gradual recovery trend will continue, though it won’t necessarily be the case for other machinery.”
Another report showed that retail sales fell 0.4 per cent in June from May, compared with a 0.7 per cent decline forecast by analysts. Outlays rose 5.9 per cent from a year ago.
A return of overseas tourists has been boosting consumption in Japan compared with the previous year, partly because the weaker yen increases their spending power.
In June, the number of visitors from abroad was back to more than 70 per cent of pre-pandemic levels, returning to above two million, according to the Japan National Tourism Organisation.
But domestic shoppers face mixed circumstances in that inflation continues to outpace the rise in their pay cheques.
Tokyo inflation came in slightly stronger than expected on Friday, while the latest readings for labour market data are due on Tuesday.
Overseas factors such as the impact from continued monetary policy tightening and further slowdowns in the Chinese economy could affect Japan as well.
Analysts expect Japan’s economy to record another three months of growth in the second quarter, albeit at a slower pace than in the first quarter.
China’s economy lost momentum in the second quarter, while Beijing has hinted that stimulus measures in 2023 will likely be limited in scale.
“Exports are expected to remain sluggish due to the slowdown in overseas economies, the lack of resilience in China and other factors,” said Dai-ichi Life’s Mr Oshiba, adding that continued rate hikes abroad should still be viewed with caution. “Industrial production will also likely remain modest for the same reasons.”
The Bank of Japan jolted financial markets last week by loosening its grip on bond yields
While the bank’s main settings remained unchanged, Friday’s adjustments will likely continue to spur talk of potential policy normalisation to come, speculation that would help strengthen the yen against the dollar.
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