Signs of an uptick in demand are emerging in Japan after the sharpest downturn in decades, prompting companies to revive production and investors to buy shares.
Economic data has slowly started to improve, partly spurred by trillions of dollars in government stimulus spending, although doubts remain as to the sustainability of any recovery.
Japanese factory output jumped in April and manufacturers forecast further gains ahead, Friday data showed, while April orders for U.S. durable goods rose by the most in 16 months.
The 5% monthly rise in Japanese industrial output, the biggest since 1953, was much greater than expected and hinted that final demand rather than restocking of depleted inventories was behind the rise.
Other figures showed household spending sliding and unemployment at a 5- year high, however.
“Overall demand is better than expected and likely to continue to grow this fiscal year due to government stimulus, but in the next fiscal year, after the stimulus fades, industrial output may stagnate,” said Yasuo Yamamoto, senior economist, Mizuho Research Institute.
In a move that supported the stronger output data, Toshiba Corp planned to raise its production of computer chips to a level it was before cuts began in January, Japanese public broadcaster NHK reported on Friday.
Falling inventories and signs of a recovery in overseas demand for chips used in mobile phones were prompting the increase, planned for July, NHK said.
Shares in Toshiba rose, as did most Asian stocks, following gains of at least 1% in major Wall Street indexes overnight.
Tokyo's Nikkei stalled after hitting a technical resistance level, but MSCI's measure of other Asia-Pacific stocks rose 0.5% to its highest since October last year. (Reuters)