Japan’s factory output rose for the fifth straight month in July and is expected to keep climbing in the months ahead — encouraging signs for a newly elected government charged with bolstering the world’s second-largest economy.
Industrial production climbed 1.9 percent from June and “continues to show an upward movement,” the Ministry of Economy, Trade and Industry said yesterday, a day after the opposition Democrats swept to power in parliamentary elections, unseating the long-governing Liberal Democratic Party.
The results beat a forecast rise of 1.6 percent in Kyodo news agency’s survey of economists. Strong gains among companies making transport equipment and steel products fueled the increase.
The economy emerged from a year-long recession in the second quarter, lifted by a rebound in exports as governments around the world infused economies with stimulus money. Manufacturers expect factory output to rise 2.4 percent in August and 3.2 percent this month.
Though the latest result is encouraging, Japan’s overall economy remains weak, with unemployment rising to a record 5.7 percent.
Industrial production is still more than 22 percent lower than it was a year ago — just before the eruption of the global financial crisis.
Consumers are spending less money. A separate report showed that retail sales fell 2.5 percent in July from a year earlier, the 11th straight monthly decline.
Chiwoong Lee, an economist with Goldman Sachs in Tokyo, says the outlook for factory output was “bright” on expected export growth, but warned of frail domestic demand.
“Consumption ... remains a downside risk for production due to deterioration in employment conditions,” he said in a note to clients.
Sustaining economic growth will be among the highest priorities for the Democratic Party of Japan, which has promised to expand the social safety net and shift Japan from its longtime reliance on exports by boosting domestic demand.
Stocks initially rose after the Democrats’ win but succumbed to the pressures of a stronger yen, which reduces the value of overseas profits for exporters.
The benchmark Nikkei 225 stock average was down 0.2 percent at 10,513.04 in afternoon trading.
The dollar was trading at ¥92.71 from ¥93.42 late on Friday.
Yesterday’s report also showed that shipments rose 2.3 percent from June, while inventories declined 0.2 percent.
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