Japan economy rebounds on strong production

Unemployment rate fell further to 3.4% in December.

The country could finally be out of technical recession.

The December data out this morning confirmed that the economy has returned to a recovery path.

According to DBS, industrial production rose 1.0% (MoM sa), matching the consensus forecast, and in line with the recent improvement in export figures.

Also encouragingly, the production forecast index registered a strong rise of 6.3% for Jan15 and a modest payback of -1.8% for Feb15. Meanwhile, unemployment rate fell further to 3.4% in Dec14 from 3.5% in Nov14, and the job-to-applicant ratio rose to 1.15 from 1.12.

Here’s more from DBS:

Overall, the full set of data for Dec14 supports our judgement that the economy has got out of technical recession and GDP growth has turned positive in 4Q14 (about 2% QoQ saar).

It also supports the case that inflation numbers (excluding tax) will stay in the positive territory in 1H15. The labour market conditions have remained tight, which should bolster policymakers’ confidence about wage growth and the medium-term prices outlook. Further policy easing appears unlikely in the near term.