Japan’s industrial production rose more than economists forecast while retail sales eked out a first time gain in three months. The indicators add a mixed signal ahead of the Bank of Japan’s policy decision later Friday, after weakness in data on consumer prices and household spending.
- Output rose 1.9 percent (estimate 0.5 percent) in June from May, the trade ministry reported on Friday.
- Retail sales rose 0.2 percent (estimate 0.3 percent).
The reports come as investors await an announcement from the central bank on whether it will further expand monetary stimulus, and after Prime Minister Shinzo Abe announced a fiscal package for more than 28 trillion yen ($267 billion). A report earlier in the day showed the BOJ’s key gauge of consumer prices declined for a fourth month in June, underscoring how far Japan is from the BOJ’s 2 percent inflation goal.
Even as production advanced in June, “output has been taking one step forward and one step back as the demand side — exports and consumption — isn’t that strong,” Norio Miyagawa, a senior economist at Mizuho Securities Co. in Tokyo, said before the reports were released. “Production may only have a very gradual pace of increase as overseas demand doesn’t look solid.”
“Japan’s economy will probably stay at a standstill as a recovery in production, consumption and exports doesn’t look promising,” he said.
- Production is forecast to rise 2.4 percent in July, and increase 2.3 percent in August.
- Measured year-on-year, production fell 1.9 percent in June.
- Retail sales dropped 1.4 percent in June from a year earlier.