Japanese Output Beats Forecast in Bright Spot for Ailing Economy

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Japanese manufacturing
Yaskawa Electric Corp. Motoman robots bound for shipment sit at the company's factory in Kitakyushu, Japan. Photographer: Akio Kon/ Bloomberg

Japan’s industrial production increased more than forecast in June, aiding an economy that struggled last quarter with weakness in retail sales and exports.

Output rose 0.8 percent from May, when it fell 2.1 percent, the trade ministry said on Thursday. While production was stronger than the median forecast for a 0.3 percent gain, economists continue to debate whether the Japanese economy expanded or contracted last quarter.

“The pickup in output doesn’t convince me that Japan’s recovery will be strong,” said Norio Miyagawa, an economist at Mizuho Securities Co. “Companies are not in a mood to gear up production. They are still maintaining a cautious stance.”

Manufacturers are under pressure from sluggish consumer spending at home and a slowdown in China that is sapping shipments abroad. The ministry, which noted gains in output of chemicals and transport equipment, forecast the pace of production gains to have slowed to 0.5 percent this month before rising to 2.7 percent in August.

A surge in visitors to Japan is sparking a boom in construction of tour buses, which is a bright spot in an otherwise difficult first half for the nation’s auto industry.

The output numbers are one of the last key data releases before the government announces second-quarter gross domestic product figures on Aug. 17.

The median estimate in a survey by Bloomberg shows economic expansion slowed to 0.8 percent in the April-June period, while economists from JPMorgan Chase & Co., Barclays Plc and Credit Suisse Group AG predict a contraction.

The yen declined 0.1 percent against the dollar to 124.09 at 10:03 a.m. in Tokyo. The Topix stock index rose 1 percent, taking a lead from gains in the U.S. and after strong earnings results from Japanese companies.

The volume of Japan’s exports to China -- the nation’s biggest trading partner -- fell 2.5 percent in June from a year earlier, the fifth straight decline, according to the finance ministry.

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