The flow of positive economic news about the Japanese economy continued yesterday.
Industrial production increased the most in 11 months in December, boosted by export demand.
The Japanese Trade Ministry said output rose 3.1% from November (when it rose 1% from October’s 2% fall).
That was a bit better than forecast and came after figures last week showed an improvement in unemployment, a lower deflation rate and a bigger than expected rise in exports.
And the upturn has a solid chance of continuing, with manufacturers said they plan to increase output 5.7% in January, but they are forecasting a fall of 1.2% for February.
The report also shows that shipments were up 1.1% in December from a month earlier, and inventories rose 1.4%.
The Trade Ministry said the industries that mainly contributed to the increase are as follows: transport equipment, electronic parts and devices and iron and steel, in that order.
And the commodities that mainly contributed to the increase are as follows: large passenger cars, fixed capacitors and auto drive, transmission and control parts.
The latest figures confirm that the Japanese economy has rebounded from the slowdown in October and November caused by the ending of a number of Government stimulus measures.
The improvement has seen economists trim their forecasts for negative growth in the final quarter of 2010 to less than 1% annual, from more than 3% three months ago.
Economic data released last week showed that deflation eased in December and the unemployment rate unexpectedly fell to 4.9% from 5.1% in November.
Consumer prices excluding fresh food declined 0.4% from a year earlier, the statistics bureau said, the smallest drop since 2009.
But there was a 3.3% fall in household spending in December as retail sales fell 2%, which is alarming and underlines the continuing weakness domestic demand.
Japanese exports accelerated for the second month in December, and ended up 13%, from November’s 9.1%.
Exports to the US jumped 16.5% and shipments to China were up 20%, regaining some of the strong growth seen earlier in 2010.
Imports slowed and the trade surplus jumped by 34.1% to Y727.7bn.
The flow of generally positive data hasn’t however, offset the impact of Standard & Poor’s downgrading of Japan’s credit rating to AA-, fourth-highest level.
That shocked the country, which has for years shrugged off or ignored the reason for the cut, the continuing rise in the country’s government debt ratios.
