Japan’s factory output rose in January at the fastest pace in more than two years and core inflation hovered near a five-year high, comforting signs for an economy expected to take a hit from a sales tax hike scheduled for April.
Labor demand continued to improve and household spending rose more than expected, providing hope that domestic demand could underwrite a recovery after lackluster growth in the fourth quarter of last year.
The upbeat data showed the economy started the year strongly as shoppers brought forward purchases before the tax hike, but there are concerns that more stimulus would be needed later in the year to support growth as consumer spending is expected to sag.
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