Japanese industrial production rose for a seventh consecutive month in September, underlining the recovery in exports because of stronger demand from China and worldwide government stimulus spending.
Manufacturers increased output by 1.4 per cent in September from August, a larger increase than expected. That followed a rise of 1.6 per cent in August.
The boost in production was supported by exports, particularly of transportation equipment, electronic devices and electrical machinery, according to the Ministry of Economy, Trade and Industry.
Industrial production fell 18.9 per cent in September compared with the same month a year ago. The ministry said it expected production to continue to rise on a month-on-month basis in October and November, based on its survey of production forecasts by manufacturers.
The increase in production is being spurred in particular by demand from China and other Asian countries. In September, the volume of exports rose 2.6 per cent from August. But economists warned that the medium-term outlook for production remained uncertain because of overcapacity and weak domestic demand in Japan.
“Deflation is more likely than not in the future, and this could set domestic demand on another protracted period of stagnation,” said Alaistair Chan, economist at Moody’s Economy.com.
“The outlook for production in the medium term at this stage still remains tied to the outlook for exports, which unfortunately is subdued.”
The rise in industrial production comes as the Bank of Japan prepares to present its semi-annual outlook on the economy on Friday.
The central bank upgraded its assessment of the economy in its latest monthly report, saying that conditions were “likely to improve gradually”.
However, government ministers have expressed concern over the possibility that the central bank could terminate special measures to ensure businesses have access to credit, which expire in December.