Japan¡¯s factory output rose in May as manufacturers were able to cope with the fallout from the war in Iran.
Industrial production climbed 0.5% from the previous month, the industry ministry reported Tuesday. Economists had expected a 0.6% gain. Output fell 1.7% from a year earlier, below all estimates in a survey of economists.
¡°Demand on the production side remains relatively robust,¡± said Takeshi Minami, chief economist at the Norinchukin Research Institute. ¡°For the April-June quarter, the impact of the situation in Iran has been limited. I believe the economy remains on a recovery path.¡±
The Japanese government says it can secure enough crude oil through March 2028 by cultivating alternative procurements to the Strait of Hormuz, a key channel for global oil tankers. Last week, Prime Minister Sanae Takaichi instructed the industry ministry to compile by the end of August a comprehensive set of measures to strengthen the resilience of the country¡¯s energy system.
The monthly advance in production included transportation equipment excluding cars thanks to an increase in output of aircraft engine parts. Chemicals, petroleum and coal also rose, as did standard passenger vehicles, chassis and body parts.
Compared with a year ago, chemicals and metal products led the decline, falling 11.5% and 3.1%, respectively.
Manufacturers expect output to rise 3.7% in June and remain unchanged in July, according to the report.
¡°The rise in Japan¡¯s industrial production in May suggests pressure from the oil shock is easing. The back-to-back gain from April points to firm GDP growth in the second quarter,¡± Bloomberg economist Taro Kimura said, referring to gross domestic product. ¡°For the Bank of Japan, stronger output should reduce concern that a squeeze in crude-oil supply will damp growth.¡±
Separately, the jobless rate held at 2.5% in May, the internal affairs ministry reported. The job-to-applicant ratio slipped to 1.17 in May from 1.18 a month earlier, meaning there were 117 jobs offered for every 100 applicants, the labor ministry reported.
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