Japan’s factory output grows, unemployment rate declines

Japan’s Industrial output grew 2.0% in February as compared to the previous month.

The Dollar Business Bureau

What indicates a marginal rebound in the Japanese economy, the country’s factory output grew at its fastest pace since June last year while the unemployment rate hit a two-decade low last month.

A recovery in the Japanese factory output reflects overall positive sentiments among the exporters and economists, who view the latest rebound in global demands would give a boost to the country’s exports.

However, consumer inflation remained unmoved and household consumption remained mild giving challenges to Bank of Japan in creating sustained price rises and steady wage growth.

The overall February performance could prompt the BOJ to withdraw its massive stimulus in its next policy move.

Industrial output grew 2.0% in February as compared to the previous month, quite in contrast with the earlier market forecasts for a 1.2% gain. The Japanese automakers ramped up production of new models in the backdrop of a cyclic growth in global demand.

Japan's unemployment rate stood at 2.8% in February, down 0.2 percentage point from January this year.

Consumption, however, fell 3.8% last month from a year earlier, registering a bigger slump than market forecasts for a 1.7% decline, suggesting the government, as well as the labour market, has to do much more to drive consumption in the country.

A pick up in energy costs has pushed core consumer inflation to 0.2% in February, clocking the fastest pace in nearly two years.

Tokyo core consumer prices, too, declined 0.4% in March from a year ago and bigger than a 0.3% drop in February.

Japan's long-stagnant economy has indicated a sign of rebound in recent months. The country’s exports and factory output have benefitted from a recovery in global demand.

Analysts project consumer inflation to be in the proximity of 1% later this year due to dissipating oil prices.

The Dollar Business Bureau - Mar 31, 2017 12:00 IST