Japan's factory output rebounds, jobless rate falls as lockdown lifts

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.

FILE PHOTO: An employee wearing a protective face mask and face guard works on the automobile assembly line as the maker ramps up car production with new security and health measures as a step to resume full operations, during the outbreak of the coronavirus disease (COVID-19), at Kawasaki factory of Mitsubishi Fuso Truck and Bus Corp., owned by Germany-based Daimler AG, in Kawasaki, south of Tokyo, Japan May 18, 2020. REUTERS/Issei Kato/File Photo

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 released on Friday 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 the 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 shrunk 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.

South Korean factory data rebounded in June, signaling the export-led economy might have moved through the worst of the economic downturn from the coronavirus pandemic. Industrial production rose 4.2 per cent month-on-month last month, recovering from a contraction in May and rising 0.7 per cent on June 2019, according to Statistics Korea. Manufacturing output surged 7.2 per cent from a month earlier, its steepest increase since the global financial crisis. Investment in facilities and retail sales also improved from May. The rosier industrial data mark an improvement from the past six months during which the South Korean economy fell into a recession for the first time in nearly two decades. While Asia’s fourth-biggest economy has been somewhat protected by the avoidance of a nationwide lockdown and solid demand for computer chips, officials in Seoul hope unprecedented government stimulus measures will further buoy the domestic economy and support jobs in the second half.

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