• Kyodo News

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Industrial production grew for a second consecutive month in December in a positive sign for the nation’s stalled economic recovery.

With output posting a gain of 3.1 percent in the month and manufacturers expecting a further increase in January, the Ministry of Economy, Trade and Industry raised its basic assessment for production in a preliminary report Monday, saying output has shown “signs of an upward movement.”

For 2010, the index of output at factories and mines rose 15.9 percent from the previous year to 94.0 against the base of 100 for 2005, marking the first rise in three years, amid improvement in overseas economies.

The rise came follows a record fall of 21.9 percent in 2009 in the aftermath of the global financial crisis triggered in September 2008 by the collapse of Lehman Brothers Holdings Inc. But the index has not yet recovered to its pre-Lehman level, which was above 100.

Transport equipment makers contributed largely to the gain, apparently helped by a government subsidy program for purchases of environment-friendly cars. The program was terminated in September.

The results from December alone slightly beat the average market forecast of a 3.0 percent rise in a Kyodo News survey. The index stood at 94.6, the ministry said. Figures are adjusted for seasonal factors.

Looking ahead, manufacturers polled by the ministry anticipate that output will jump 5.7 percent in January and drop 1.2 percent in February.

“The outcome of the industrial production suggests that the Japanese economy is heading toward exiting from the current lull,” said Yoshiki Shinke, senior economist at Dai-ichi Life Research Institute.

He also projected that production would continue to “increase moderately” as exports are likely to increase on the back of an expected recovery in overseas economies.

By sector, output by transport equipment makers grew 5.1 percent in December due to firm demand for production of cars for North America and Asia. Output of electronic parts and devices, including those for mobile phones and smart phones, gained 7.7 percent, a ministry official said.

After largely cutting back production after the government terminated its incentive program, transport equipment makers are increasing output.

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