Japan’s Factory Output Signals Economic Recovery

Japan’s factory output rose in May after companies cut production in April to offset the impact of a national sales tax hike, underscoring views the economy will absorb the increase largely unscathed.

The 0.5 percent month-on-month rise compared with the median estimate of a 0.9 percent increase in a Reuters poll of economists, and followed a 2.8 percent drop in April, data from the Ministry of Economy, Trade and Industry showed On Monday.

The data is likely to support a view that the economy will rebound in the summer from the April 1 sales tax rise and spending slump in the current quarter.  That rebound could further dampen expectations the Bank of Japan will ease policy again this year, as it is likely to support the bank’s optimistic view of an economy is on track to resume moderate recovery and meet its 2 percent inflation target.


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