RTTNews - Japanese industrial production growth was revised down for May, yet the third straight month of growth points towards a possible recovery in the recession-hit economy. Meanwhile, consumer confidence strengthened for the sixth month in a row.
The Ministry of Economy, Trade and Industry downwardly revised industrial production growth for May to 5.7% from 5.9%. However, this was down from a record 5.9% increase reported in April. Annually, production plunged 29.5% in May.
Shipments were up 4.8% from April, revised up from the initial estimate of 4.5%, while the decline in inventory was revised lower to 0.7% from 0.6%. Year-on-year, shipments and inventory slipped 30% and 8.4%, respectively.
The operating ratio increased 8% on a monthly basis, following a 10.2% growth in April. Meanwhile, production capacity dropped by an unadjusted 0.2% from April and 1.1% from the previous year.
Elsewhere, a monthly survey from the Cabinet Office showed that Japanese consumer confidence strengthened for the sixth month in a row. Confidence amongst consumers rose to 38.1 in June from 36.3 in May. However, the index stood below the expected reading of 39.5 and a level below 50 points means pessimists outnumber optimists.
Meanwhile, households' consumer confidence was 37.6 versus 35.7 in May. The survey was conducted on June 15 covering 6,720 households.
Among the sub indices of households' confidence, overall livelihood rose to 37.4 from 36.3, while the index for income growth climbed to 35.8 from 35.3 in the prior month. The reading for employment stood at 31.7, up from 28 in May and the willingness to buy durable goods was 45.5 in June compared to last month's 43.1.
Hiroshi Shiraishi, a BNP Paribas economist, said the rise in consumer confidence indicates bouncing back in household spending. But the subsidies for buying eco-friendly appliances only act to front-load demand and would not last.
Further, employment and income conditions are expected to get worse in coming quarters. Also, stock price corrections would possibly dampen household sentiment. Shiraishi said a sustainable recovery in consumption is still not in sight.
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