Japan and South Korea reported larger-than-forecast industrial production in January amid a strengthening US recovery and signs that Europe’s sovereign debt crisis may be contained.
Japanese output rose two per cent from the previous month, the trade ministry said in Tokyo on Wednesday. That exceeded the median estimate of 1.5 per cent in a Bloomberg News survey of analysts. Korean production climbed 3.3 per cent, a government report showed, versus a forecast 0.5 per cent decline.
A Chinese manufacturing index for February, due to be released tomorrow, will show a third straight expansion, a separate survey of analysts indicates. Asian stocks are poised to enter a bull market by rallying 20 per cent from a two-year low in October, while the Dow Jones Industrial Average closed above 13,000 in New York for the first time since 2008.
“The US is improving, Europe is stabilising, and Asia is chugging along at a healthy pace,” said Matthew Circosta, an economist at Moody’s Analytics Australia Pty Ltd in Sydney, who correctly predicted Japan’s output. “China is likely to have a soft landing.’”
In Japan, industrial production is at the highest levels since the earthquake and tsunami last March, with on Wednesday’s report indicating that manufacturers will boost output this month and next. Exports of vehicles from Japan increased 4.1 per cent in January.
The MSCI Asia Pacific Index advanced 0.9 per cent to 129.43 as of 2.44 pm in Tokyo. A close above 128.82 would mark the beginning of a bull market.
Elsewhere in the region, Australia’s retail sales advanced in January for the first time in three months, gaining 0.3 per cent from a month earlier, the Bureau of Statistics said.
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India’s gross domestic product rose 6.1 per cent last quarter from a year before, less than the 6.3 per cent forecast by economists, reinforcing evidence of Asia’s slowdown at the end of 2011, when economies including Japan’s and Singapore’s shrank.
In the US, a report on Wednesday may show the world’s biggest economy expanded at a 2.8 per cent annual pace in the fourth quarter, which would be the fastest in more than a year. In Greece, lawmakers have ratified a ^3.2-billion ($4.3 billion) package of spending cuts, taking Prime Minister Lucas Papademos one step closer to securing a rescue package to avert financial collapse.
Japan’s economy, the world’s third-biggest, may be aided by progress in containing Europe’s debt crisis, a weakening yen and monetary easing in emerging nations, said Jun Kawakami, an economist at Mizuho Securities Co in Tokyo.
“There’s no need to be excessively pessimistic about the outlook for Europe,” Kawakami said before on Wednesday’s report.
In South Korea, the finance ministry and central bank on Wednesday said that the world economy may be set for a “modest recovery” that will aid the nation’s exports. Europe’s economy is “sluggish,” while the US is showing signs of improvement and demand will be maintained in emerging economies, the officials said.
Japan’s currency has weakened since the Bank of Japan announced extra monetary stimulus and set an inflation goal on February 14, trading at 80.41 as of 1.48 pm on Wednesday in Tokyo, compared with a postwar high of 75.35 in October.
Besides the boost to exports from declines in the yen, manufacturers are benefiting from incentives for purchases of environmentally friendly cars and a fading of disruptions to supply chains from flooding in Thailand. Car sales jumped 24 per cent in January from a year earlier, the most in 22 years, a government report showed yesterday.
‘Firm footing’
“The revival of the eco-car subsidies will likely help domestic production maintain a firm footing,” Kyohei Morita, chief economist at Barclays Capital in Tokyo, said before on Wednesday’s report. Nissan Motor Co is forecasting a net income for 2011 of 290 billion yen ($3.6 billion) and earlier this month Toyota raised its net income forecast for the year by 11 per cent.
Prime Minister Yoshihiko Noda’s 2.5 trillion yen ($31 billion) extra budget, passed by the parliament this month, included 300 billion yen for the subsidy programme. The programme will help automakers increase sales by 900,000 vehicles in their home market during 2012 after a record 14 per cent drop in 2011, Toshiyuki Shiga, chairman of the Japan Automobile Manufacturers Association, said in December.