- Kazuhiko Ogata, an economist at Credit Agricole SA
Japan's industrial production unexpectedly increased in September, fuelling hopes that the world's third biggest economy escaped contraction for a second consecutive quarter in the three months through September. Industrial output rose 1.0% on month in September after the 1.2% drop in August, beating economists' expectations for a decline of 0.6%. Electronic parts, devices and chemicals contributed to the growth last month, in the light of a China's slowdown that has hit Japanese exports hard. The recovery in industrial output last month means economic production might have been strong enough last quarter to avoid Japan sliding back into recession. The Japanese economy contracted 0.3% in the June quarter. According to the Survey of Production Forecast in Manufacturing, production is predicted to rise 4.1% in October and decrease 0.3% in November. The output report was viewed as a crucial data by BoJ officials as they prepared to consider whether to expand what is already an unprecedented asset-buying programme. Economists remain divided on whether the central bank will boost monetary stimulus at its meeting Friday.
Meanwhile, the Japanese Yen strengthened after release of the data to trade at 120.80 per US Dollar.
© Dukascopy Bank SA