Japanese factory output hit its fastest pace in nearly a decade as coronavirus pandemic-related disruptions in China ebbed.
Retail sales rose in June – the fourth successive month of gains – supporting the view that rising consumption helped the economy return to growth.
But analysts were cautious about longer-term recovery. “The global economy and especially manufacturing are clearly slowing down,” said Takumi Tsunoda, senior economist at Shinkin Central Bank Research Institute.
“But Japanese production hasn’t normalised yet. Its recovery momentum has further to go as supply constraints ease.”
The jobless rate, meanwhile, stood at 2.6% in June, unchanged from the previous month, while an index gauging job availability was 1.27 in June, slightly higher than 1.24 in May.
Factory output surged a seasonally adjusted 8.9% in June from a month earlier, posting the biggest one-month rise since comparable data became available in February 2013, official data showed on Friday.
China Easing Boosts Parts Supply
The advance was largely due to the lifting of a strict Covid-19 lockdown in Shanghai, which helped Japanese factory output of motor vehicles, electrical machinery and electronic parts and devices.
“A huge 14% month-on-month rebound in car production drove the increase as parts shortages resulting from the Shanghai lockdown eased,” Marcel Thieliant, senior Japan economist at Capital Economics, said.
While the advance was bigger than a 3.7% gain expected by economists in a Reuters poll, a government official said downside risks for output remained as parts supply delays lingered.
The data comes a day after Toyota Motor said it produced 793,378 vehicles globally in June, slightly above a target it had cut twice and capping a quarter that saw the company slip 9.8% behind its production plan.
The government upgraded its assessment of industrial production. Japanese factory owners surveyed by the Ministry of Economy, Trade and Industry (METI) expected output to extend its recovery by 3.8% in July and 6% in August.
Separate data showed retail sales were weaker than expected, rising 1.5% in June from a year earlier, compared with a median forecast for a 2.8% gain in a Reuters poll.
- Reuters, with additional editing by George Russell