Japan industrial production up 1.9 percent in July

TOKYO — Japan's factory output rose for the fifth straight month in July as manufacturers gained confidence in the country's nascent recovery.

Industrial production in the world's second largest economy climbed 1.9 percent from the previous month and "continues to show an upward movement," the Ministry of Economy, Trade and Industry said Monday in a closely watched report.

The results beat a 1.6 percent rise forecast in Kyodo news agency's survey of economists. Strong gains among companies making transport equipment and steel products fueled the increase.

Japan's economy emerged from a yearlong recession in the second quarter, lifted by a rebound in exports as governments around the world infused their economies with stimulus money.

Though the latest result is encouraging, production levels remain sharply below where they were before the onset of the financial crisis and the subsequent collapse in global demand. Output is down more than 22 percent from a year earlier.

The figure also represents a marked slowdown from the spring when output rose 5.7 percent in May and 5.9 percent in April.

Sustaining economic growth will be among the highest priorities for the Democratic Party of Japan, which won a landslide victory against the ruling Liberal Democrats in Sunday's parliamentary elections. The Democrats have promised to expand the social safety net and move Japan away from its longtime reliance on exports.

Stocks advanced after the Democratic win, with the benchmark Nikkei 225 stock average up 1 percent at 10,634.80. Investor enthusiasm was tempered by a rally in the yen against the world's major currencies. The dollar fell under the 93-yen level during morning trading — bad news for exporters whose overseas profits decline in value when the Japanese currency rises.

Manufacturers expect factory output to continue climbing in the months ahead, the ministry said. It predicts industrial production to rise 2.4 percent in August and 3.2 percent in September.

The report also showed that shipments rose 2.3 percent from June, while inventory declined 0.2 percent.

Before output began to rise in March, it had posted a five-month losing streak as some of Japan's corporate icons such as Toyota and Sony announced drastic cutbacks in production and jobs amid Japan's steepest recession since World War II.

Fallout from those cuts continue to take their toll on workers and families even as factories come back to life. Japan's unemployment rate jumped to a record high 5.7 percent in July.

A separate report Monday showed that retail sales fell 2.5 percent in July from a year earlier — a sign that spending is down amid the ongoing anxieties about jobs and wages.