Production at Japanese factories rises, job availability at its highest for nearly a year

TOKYO (Reuters) – Output at Japanese factories rebounded in June and job availability reached its highest level in nearly a year, data showed, a sign that strong foreign demand was compensating for the drag on consumption of the pandemic.

But retail sales were largely flat in June from a year earlier, suggesting that any recovery in the world’s third-largest economy would be slower than in other advanced economies.

The mixed batch of data comes as Tokyo hosts the Olympics amid an increase in coronavirus infections that has forced the capital to impose state of emergency restrictions.

The renewed restrictions dashed policy makers’ hopes of a strong rebound in growth from July to September after weak economic performance expected in the previous quarter.

Industrial production rose 6.2% in June from the previous month after a sharp drop of 6.5% in May, according to data released on Friday, compared to a median market forecast for a gain of 5.0 %.

Separate data showed the job-to-candidate ratio in Japan fell from 1.09 to 1.13 in May, beating market estimates for a reading of 1.10. The unemployment rate fell to 2.9% from 3.0% in May.

Highlighting weakness in consumption, retail sales rose only 0.1% in June from a year ago, data shows, compared to a median market forecast for a gain of 0.2 %.

The Japanese economy shrank 3.9% on an annualized basis in January-March and probably barely increased in the second quarter as the pandemic took a toll on spending on services.