Rapid rise in Japan’s industrial production

Bloomberg

Production rose 5.2 percent from March, the second monthly gain, the Trade Ministry said today in Tokyo. The increase was faster than the 3.3 percent economists estimated, and companies said they planned to boost output in May and June as well.

The yen gained on speculation funds will flow into Japan as the economy resumes growing after last quarter’s record contraction. Still, output is running at two-thirds last year’s levels, saddling manufacturers such as Nikon Corp. with workers they no longer need and driving the jobless rate to a five-year high of 5 percent.

"This is not so much a green shoot as it is a green tree," said Glenn Maguire, chief Asia-Pacific economist at Societe Generale SA in Hong Kong. "Optimism on Japan is certainly not misplaced as we look at a reasonably strong quarter of growth in April to June."

The increase in production was the biggest since March 1953, a year after the U.S. military occupation ended and as the Korean War was drawing to a close.

Bank of Japan Governor Masaaki Shirakawa said this week the economy will resume growing this quarter after shrinking a record 15.2 percent in the three months ended March 31. Stimulus spending by governments around the world totaling $2.2 trillion has helped to prop up demand from abroad. Exports rose 1.9 percent in April from March, a second monthly gain.

Companies are making more cars and electronics to replenish stockpiles they managed to drain during the export slump. Inventories fell 2.7 percent in April, a fourth monthly drop. Businesses surveyed by the Trade Ministry said production will increase 8.8 percent in May and 2.7 percent in June.