Manufacturers forecast the biggest jump in industrial production in more than two years this month as domestic demand strengthens, adding to signs that Prime Minister Shinzo Abe can drive a sustained recovery.
Output is projected to rise 4.7 percent from September, the Ministry of Economy, Trade and Industry said Wednesday, a gain that would be the biggest since May 2011.
METI raised its assessment of production, saying it’s “picking up.” Output increased 1.5 percent in September.
Abe needs the economy to maintain momentum through April, when the consumption tax increase will likely cause a contraction.
The next challenge for the prime minister is driving through business deregulation to spur long-term growth and encouraging companies to boost wages as export gains moderate.
“The underlying trend of industrial output is very supportive of ‘Abenomics,’ ” said Junko Nishioka, chief economist at Royal Bank of Scotland Group in Tokyo and a former Bank of Japan official. “The key for Abenomics is the recovery of capital spending in the corporate sector.”
Corporate profits are set to surge an average of 95 percent in the July-September period, after the yen posted its biggest quarterly decline in 17 years, according to data compiled by Bloomberg.
Omron Corp., a maker of electronic components and equipment for factory automation, raised its full-year profit forecast Tuesday, citing the economic recovery and the weaker yen.
Japan’s regional economies are “gradually picking up,” according to a speech by Finance Minister Taro Aso read Wednesday by Vice Finance Minister Yoshihisa Furukawa.
Data released Tuesday also pointed to improvement in the overall economy. Confidence of small businesses rose in October to the highest since November 2006, with more companies saying they were optimistic than pessimistic for the first time since March 2007.
Household spending last month posted the biggest gain since March, while retail sales increased the most in more than two years.
The progress at home came after the pace of export growth last month fell to all major overseas regions, with weakness concentrated in shipments to Asia.
Vehicle Output Down
April-September vehicle output fell 3.4 percent from a year earlier to 4.74 million units, marking the first drop in two years, an industry group said Wednesday.
Car output declined 4.9 percent to 4.02 million units while truck output went up 5.1 percent to 649,374 units and bus output rose 15.8 percent to 67,736 units, the Japan Automobile Manufacturers Association said.
Exports slid 0.9 percent to 2.35 million vehicles, reflecting decreased demand in Europe and Asia.
In September alone, vehicle production in Japan rose 13 percent from a year earlier to 873,623 units for the first growth in 13 months. Exports grew 10.2 percent to 424,194 units.