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Japanese Numbers Look Good

Japanese Numbers Look GoodJapanese Numbers Look Good

Japan’s factory output rose more than expected in December, as production of automobile-related parts and other machines expanded, government data showed Wednesday. The figures showed industrial production was up 2.7%, the third consecutive monthly rise after a 0.5% rise each in October and in November. It beat market expectations of a 1.5% rise.

The latest data, released by the industry ministry, comes as Japan has notched up seven straight quarters of economic growth—the longest positive run for 16 years—with the upcoming 2020 Olympic Games giving the economy a shot in the arm, AFP reported.

But it has struggled to put to rest deflation fears, failing to achieve the 2% inflation rate target set by the central bank, which is thought crucial to boosting the economy.

The government and central bank hope to see a “virtuous cycle”, with an export-led recovery having a positive impact on jobs and household income and thereby boosting domestic demand, which accounts for roughly 60% of Japan’s economy.

On Tuesday, internal ministry data showed that the country’s household spending slipped 0.1% in December while the jobless rate edged up to 2.8% from 2.7% the previous month.

Meanwhile, Bloomberg expressed views of two economists:

- “The numbers look good, which is my simple impression,” said Hiroshi Hanada, head of economic research at Sumitomo Mitsui Trust Bank, adding that the Japanese economy likely expanded again in the fourth quarter. “Production is rising firmly on a quarterly basis, too.” While output may fall in January, it is forecast to rebound in February, Hanada noted. “I don’t think the upward momentum for production will be lost.”

“It’s debatable whether domestic demand is strong, but the consensus is that exports will continue to rise,” said Yasutoshi Nagai, chief economist at Daiwa Securities Co.

 

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