Data released by Japan Ministry of Economy, Trade and Industry (METI) on Friday showed that Japan's all industry activity rebounded in June on robust industrial production. Japan's all industry activity index gained 1 percent m/m in June, reversing May's 1.3 percent decline and beating economists' forecast at 0.9 percent. All industry output rose 0.3 percent Q/Q – the firmest for five quarters. On an annual basis all industry activity eased to 0.1 percent from 0.3 percent.
Details of the report showed that industrial output advanced 2.3 percent in contrast to a 2.6 percent fall in May. Similarly, tertiary industry activity grew 0.8 percent versus a 1.2 percent drop a month ago. However, construction activity index slid 0.1 percent following a 2 percent growth posted in May.
Upbeat data contrasts with the message from the official GDP figures, which suggest that growth moderated from 0.5 percent Q/Q to zero in Q2. Sentiment surveys also provide mixed messages about conditions at the start of Q3. Manufacturing and services PMIs were slightly improved in July, while the economy watchers survey saw the current conditions index that month rise to its firmest since March.
In contrast, however, the Reuters Tankan suggested that business conditions were at their least favourable for three years. The latest Reuters Tankan suggested only modest overall improvement in the middle of the third quarter. Both manufacturers and non-manufacturers alike forecast only relatively modest improvements in business conditions over the coming three months.
