"There's a large majority of bond investors who think the next move by the BOJ is going to be more easing."
- Morgan Stanley MUFG Securities Co.
Friday's final data showed the total value of industrial output in Japan rebounded significantly in April, when it rose by 1.2% on a monthly basis, following a fall of 0.8% in March and beating expectations for a 1.0% jump. Revised exports came in with a climb of 0.6%, supported by weaker Yen; however, the benefits from the weakened currency were not as high, while many factories have shifted their production overseas.
Furthermore, core machinery orders climbed in 3.8% in April, an increase for the second consecutive month, coming in well above an expectation for a 2.2% decline. Despite fluctuations of machinery orders, the rise indicates firms' confidence about the outlook for future demand. All in all, conditions in Japan's economy seem to be improving, as final GDP grew 1% in the first quarter of 2015, better than 0.7% forecasted, supported by improvement in investment. Data showed that both gross fixed capital formation and investment of private non-residents gained 0.4%. However, economists remain cautious about the recovery, as surveys warned that Japanese manufacturers were facing unpleasant conditions in the second quarter and the business survey index fell rapidly from 2.4 in Q1 to -6.0 in the current three-month period, which signals about more pessimistic outlook for the economy.
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