Japan factory output climbs in June, as inflation stalls

Markets Associated Press

Japan's factory output rose in June, while unemployment fell to 2.8 percent, as a recovery in global demand helped drive growth in the world's third-largest economy.

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The Ministry of Economy, Trade and Industry reported Monday that factory production in June rose 4.9 percent over a year earlier and 1.6 percent from the month before.

Consumer demand in the world's No. 3 economy picked up in June with the payment of half-yearly bonuses.

Labor conditions were tight, with the number of job offers to applicants at a 43-year high of 1.51. But inflation, which was reported earlier, remained flat.

After many years of excess spare capacity, the slack in the economy has slowly tightened, with inventories falling sharply in June, the METI report said. Factory output is at the highest level it has been in more than three years.

"Incoming data continue to send a positive message on growth, while inflation momentum remains weak," Masamichi Adachi of JP Morgan said in a commentary.

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The relatively upbeat data are a rare piece of good news for Prime Minister Shinzo Abe's administration as it weathers a dip in public approval ratings amid allegations over cronyism and abuse of influence.

A rebound in exports has helped support the economy despite slow progress toward attaining a 2 percent inflation target that Abe and the central bank set more than four years ago in hopes of rekindling faster growth.

Core inflation, excluding volatile food prices, rose 0.4 percent in June, level with May's consumer price index. But excluding both food and energy costs, it was flat.