Japan’s factory output rebounds; jobless rate falls

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An employee works on the automobile assembly line at the Kawasaki plant of Mitsubishi Fuso Truck and Bus Corp, owned by Germany-based Daimler A. Photo: REUTERS file

By DANIEL LEUSSINK

Japan’s industrial output snapped four months of decline in June, pointing to a modest recovery in broader business and consumer activity in the world’s third-largest economy following a heavy hit to demand from the coronavirus pandemic, according to data released on Friday.

Separate data showed the June jobless rate edged down from a three-year high hit the previous month, although the number of available jobs per applicant fell to a more than five-year low.

Official data showed factory output increased 2.7% in June from the previous month when it hit its lowest level since March 2009 during the financial crisis.

The sharp rise, which followed four months of declines, was largely thanks to a bounce in motor vehicle production. It beat the median market forecast of a 1.2% rise in a Reuters poll of economists.

Manufacturers surveyed by the Ministry of Economy, Trade and Industry (METI) expect output to jump 11.3% in July and 3.4% in August, the data showed.

“We think manufacturing output will rise by around 9% in the third quarter,” said Tom Learmouth, Japan economist at Capital Economics. “However, we expect it to remain below the level it was at before last year’s sales tax hike until 2022.”

The government raised its assessment of industrial production to say it had stopped falling and was now picking up.

Analysts expect the economy to have shrank by more than 20% on an annualized basis in the second quarter as the coronavirus pandemic and lockdown measures seen around the world delivered a blow to business and consumer demand.

Preliminary April-June GDP data will be released on Aug 17, two weeks after the government next Monday announces a revision of first-quarter GDP data to take into account a large downgrade of business spending for the quarter.

Japan’s seasonally adjusted jobless rate fell to 2.8% in June, separate government data showed, easing from a three-year high hit the previous month and beating the median estimate of 3.1%.

The jobs-to-applicants ratio dropped to 1.11 in June from 1.20 in May, marking the lowest reading since October 2014, labor ministry data showed. It means fewer than six jobs were available per five job-seekers.

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