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December 29, 2010    

Japanese factory output picks up, deflation worries continue

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by Kay Murchie

Japan’s industrial production rose in November for the first time in six months, increasing by 1% on the previous month, boosted by higher car production.

The rise was also attributed to Government incentive programmes and will undoubtedly ease concerns about the recovery of the world’s third largest economy.

The figures, published by the Ministry of Economy, Trade and Industry, said it is hopeful that factory production will continue to increase in the coming months.

However, in other news, official figures show Japanese core consumer prices fell 0.5% in November compared with a year ago – representing the 21st consecutive monthly decline that the economy has been in deflation.

A short period of deflation (where prices fall rather than increase) could be a serious threat to the economy because it deters consumers and businesses from spending in expectation of falling prices.

In the meantime, the country’s unemployment rate held steady at 5.1% last month. Analysts say the jobs market is not expected to improve in the coming months.

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