Japan’s industrial output increased the most in more than three years while retail sales slid and inflation slowed, underscoring strength in export industries and weak domestic demand.
Production jumped 4 percent in January from the previous month, exceeding forecasts with the biggest gain since June 2011, according to trade ministry data. Retail sales fell 1.3 percent, household spending dropped and the central bank’s main inflation measure slowed to 0.2 percent, excluding sales-tax effects.
A pick up in exports driven by the weaker yen and stronger demand in the U.S. helped fuel manufacturing. The drop in the exchange rate is also increasing costs for households that have seen living expenses outpace incomes, highlighting the stakes for Prime Minister Shinzo Abe as he tries to get companies to boost pay in this spring’s negotiations with labor unions.