By Tetsushi Kajimoto
TOKYO (Reuters) – Japan’s government upgraded its assessment of factory output for the first time in a year, saying in its monthly economic report that it showed signs of picking up and signalling production may have bottomed out.
The government also upgraded its assessment of imports and public works while leaving its overall economic assessment unchanged for a third straight month. There was no revision to other components such as private consumption and capital expenditure.
“The Japanese economy is recovering at a moderate pace, although it recently appears to be pausing,” the monthly report said.
The report was presented at a meeting of relevant cabinet ministers and ruling coalition lawmakers and Bank of Japan (BOJ) Governor Kazuo Ueda.
“Industrial production shows movements of picking up recently, although manufacturing activities declined due to the effects of suspension of production and shipment by some automotive manufacturers,” the report said.
It said there were signs of a pick-up in factory output, upgrading its assessment of this metric for the first time since May last year, according to a Cabinet Office official who compiled the monthly report.
The scandal that had emerged at Toyota (NYSE:)’s compact car unit Daihatsu led to the suspension of output and shipments, curbing consumer spending on cars in the first quarter.
In addition, earthquakes that struck the Noto peninsula, northwest of Tokyo, also have ripped through factory activity of cars and electronics devices, paralysing output and shipments.
The change in the assessment on industrial output may suggest that these temporary headwinds to factory activity likely have eased.
Gross Domestic Product (GDP) data by the Cabinet Office out earlier this month showed the Japanese economy contracted 2% annualised in the first quarter as consumption tanked. Analysts expect the economy to rebound this quarter albeit moderately.
The BOJ ended its negative rates and yield control policy in a landmark shift away from monetary stimulus last month, raising rates for the first time since 2007 while coming under pressure on further rate hikes.
