Japan's June factory output rises 2% from a month earlier © Reuters. FILE PHOTO: A worker is seen in front of facilities and chimneys of factories at the Keihin Industrial Zone in Kawasaki, Japan September 12, 2018. REUTERS/Kim Kyung-Hoon

TOKYO (Reuters) – Japan’s factory output improved for the first time in two months in June, government data showed on Monday, highlighting growing confidence among manufacturers buoyed by strong demand.

Many countries, including Japan, are relying on domestic consumption to underpin growth while the risk of global recession persists.

Factory output rose 2.0% in June from a month earlier on a seasonally adjusted basis. That was lower than a median market forecast for a 2.4% gain but followed a revised 2.2 % decrease in May.

Production in the auto-related sector, a key industry for Japan Inc with many suppliers involved, rose 6.1%. Auto sales both domestic and abroad were strong, a Ministry of Economy, Trade and Industry (METI) official told a media briefing.

Output of trucks and auto parts, including gears for electrified vehicles, also contributed to the upward swing in the data, the official said.

The top 3 Japanese automakers, Toyota Motor (NYSE:) Corp , Honda Motor Co and Nissan (OTC:) Motor Co reported last week that global production increased in the first six months of 2023 compared with the same period a year earlier, as strains on semiconductor supplies eased.

Electronic parts and devices output went up 6.8%, as the shipment of capacitors used for smartphone production increased, the METI official said.

METI maintained its assessment of industrial output, saying “production is slowly picking up.”

Manufacturers surveyed by METI expected output to fall 0.2% in July and increase 1.1% in August, the data also showed.

“We’ll continue to monitor the effects of the shortage of parts and materials supply and the impact of rising prices” in coming months, the METI official said.

Separate data also showed Japanese retail sales rose 5.9% in June from a year earlier, in line with forecasts.

Compared with the previous month, retail sales contracted 0.4% in June, following a 1.4% rise in May, the data showed.

(This story has been corrected to say that growth was less than forecast, not more, in paragraph 3)


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