The industrial production in Japan rose in November and the companies expect to increase their production over the coming months. The preliminary data from the Commerce Department showed that industrial production grows by 1.5% mom in November. Thus it justifies to some extent market expectations were for 1.6% growth. For comparison, in October the industrial production in the country recorded zero growth.
The companies in the sector surveyed the ministry expected in December industrial output to expand by 2%, while in January the forecast growth is 2.2%. These expectations are a signal that businesses are becoming more optimistic about demand for exports.
Electronic device production rose 3.6% on month, the second month of increase. Production of transport equipment, including cars, rose 2.0% on month after falling 0.6% in October.
Another bright spot in the data hows that companies decreased inventories for the third month in a row, while shipments increased for the third straight month. Earlier in 2016, inventories reached their highest level since 2009 on a seasonally adjusted basis. Economists look to decreasing inventories as a sign that companies will increase production.
The separate government data showed that retail sales in Japan grew by 1.7% yoy in November and so far exceed forecasts the market for 0.6% increase.
Overall, the data support the notion that Bank of Japan will refrain from expansion of the program for incentives in the coming months. Although domestic demand still lacks strength, acceleration of exports is the engine production.
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