Japanese Industrial Output Rises In June

TOKYO (AP) -- Japan's factory output rose for the fourth straight month in June as hopeful manufacturers boosted production to meet an uptick in global demand from depressed levels.

Industrial production in the world's second-biggest economy climbed 2.4 percent from the previous month and "continues to show an upward movement," the Ministry of Economy, Trade and Industry said in a closely watched monthly report.

For the April-June period, factory output surged 8.3 percent -- the biggest quarterly increase in more than five decades -- though production was nearly one quarter lower than a year earlier, reflecting the severity of the slump in previous months.

The figures suggest the recession is loosening its hold on Japanese manufacturers like Toyota and Sony, which rely heavily on consumers overseas to buy their cars and gadgets. The unprecedented drop in world demand triggered by last year's global financial crisis dragged the country into its steepest economic downturn since World War II.

"The Japanese industrial production release highlights the dilemma that seems to be facing a lot of investors, which is that the growth rate is strong but the level of activity is still very depressed," said Richard Jerram, chief economist at Macquarie Securities in Tokyo. "Emerging signs of demand improvement should offer reassurance."

Still, economists worry that recovery among companies is not trickling down to workers and families.

Retail sales fell for the 10th consecutive month in June, while unemployment is expected to have risen again when the government releases its report Friday.

Lackluster domestic demand, which accounts for more than half of Japan's economy, could send prices lower and undermine the nascent recovery.

The trade ministry predicted factory output will rise 1.6 percent in July and 3.3 percent in August.

Inventory in June fell 1 percent from the previous month in the sixth straight month of decline, while shipments rose 3.5 percent, the report said.

Strong output gains among companies making electronic parts, steel products and chemicals contributed to the growth, the ministry said.

In June, export declines eased in all of Japan's major markets, particularly China. Huge stimulus spending by Beijing helped Chinese growth accelerate in the second quarter, expanding by 7.9 percent from a year earlier.

Mills at Nippon Steel Corp. have been operating at about 50 percent of capacity in recent months, but the company is starting to raise output to meet Chinese demand. Earlier this month, Japan's biggest steelmaker said it would soon restart one of two blast furnaces idled since February.

Before production began to rise in March, Japan had posted a five-month losing streak as manufacturers announced drastic cutbacks in production, inventories and employment.

The deep slump resulted in gross domestic product contracting at a record annualized pace of 14.2 percent in the first quarter.

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