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Economy

Japan's May industrial output rises 2.3% on higher auto output

Japan expects its industrial output to fall 1.2% in June and increase 0.3% in July.   © Reuters

TOKYO (Kyodo) -- Japan's industrial output in May rose 2.3 percent from the previous month, helped by robust auto production, government data showed Friday.

The seasonally adjusted index of production at factories and mines stood at 105.2 against the 2015 base of 100, the highest level since 105.6 last October, the Ministry of Economy, Trade and Industry said in a preliminary report. The result followed a 0.6 percent increase in April.

"We had expected overall production to drop because of the 10-day Golden Week holidays (through May 6), but it was stronger than we had anticipated, which shows that underlying domestic demand is robust," a ministry official said.

He also attributed the gain to car model changes which led to production increases.

The Golden Week holiday this year was extended to 10 days, running from April 27 to May 6, to commemorate Emperor Naruhito's ascension to the throne on May 1.

The government retained its assessment of production, saying it "fluctuates indecisively." The official said some manufacturers cited concerns about the outlook for demand in China due its ongoing trade dispute with the United States.

Based on a poll of manufacturers, the ministry expects output to fall 1.2 percent in June and increase 0.3 percent in July.

Aside from the auto industry, the electric machinery and information and communication electronics equipment sector also contributed to the gain in production.

Overall, 13 out of 15 business sectors saw production rise, with the transport sector excluding automobiles among those which saw falls in output.

Takuji Aida, chief economist at Societe Generale Securities, said the latest data indicates that "the downward swings in production activities have stopped, supported by strong domestic demand."

But he also said that the environment surrounding exports "remains weak, with the U.S.-China trade frictions dampening business sentiment of the manufacturers."

The index of industrial shipments climbed 1.6 percent to 104.3 while that of inventories was up 0.6 percent at 104.4.

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