Here's proof that Japan's economy is heating up

Amidst regional 'cool down'.

According to HSBC Global Research, data released today offered more convincing evidence that Japan's economy is heating up, even as the rest of the region cools down. Though the headlines will be dominated by the return of (core) inflation, manufacturing was even more impressive. 

Japan's May National CPI eased to -0.3% y-o-y (prior: -0.7%, bbg: -0.4%). Meanwhile, industrial production jumped 2.0% m-o-m sa (prior: 0.9%, bbg: 0.2%). Jobless rate also stayed flat at 4.1% sa (prior: 4.1%, bbg: 4.0%).

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Helped by a healthy dose of short-term stimulus, domestic demand is shoring up economic activity. That's no reason to be complacent.

With external headwinds growing stronger, domestic demand, while robust, may not be enough to sustain the impressive pace of H1 2013 growth in Q3 and beyond. But for now, Japan seems to be moving along to its own rhythm.