Japan's factory output jumps 3.7 pct in Jan., yearly pace drops

Japan's industrial output rose a seasonally adjusted 3.7 percent on month in January, accelerating from a 1.7 percent drop logged a month earlier, the Ministry of Economy, Trade and Industry said Monday.

According to the ministry's preliminary report, factory output came in ahead of median market forecasts for a 3.2 percent increase, with the index of output at factories and mines standing at 99.8 against the base of 100 in 2010.

The growth in production marks the quickest increase since the same month a year ago, but on an annualized basis factory output contracted 3.8 percent on year in January, following a 1.9 percent drop in December, although the figure was in line with analysts' expectations.

According to the ministry, industrial shipments saw an uptick of 3.4 percent to 97.9 in the recording period, while inventories retreated 0.3 percent to 112.0.

The latest figures follow an economic contraction logged in the last quarter on falling domestic consumption and a slump in exports.

Economists said the figures suggested some improvement in overseas demand which has dipped, but pointed out that some economic fundamentals like the flat inflation rate in January, could lead to further easing measures by the central bank.

The Bank of Japan has plunged its interest rate into negative territory in a bid to to encourage funds to flow into the economy, as part of its reflationary efforts and to shore up the economy, which, if it contracts in the current quarter will mark a technical recession. Enditem