Japan Output Surges as June Retail Sales Beat Forecasts

Japan’s factory output and consumer spending gathered momentum in June, signaling a firmer footing for the world’s fourth-largest economy heading into the second half of the year. Preliminary data from the Ministry of Economy, Trade and Industry showed industrial production rising 1.7% from May, sharply exceeding the 0.8% decline economists expected, while year-on-year growth swung to 4.0% from a 2.4% contraction the previous month. Retail sales advanced 1.0% on the month and 2.0% from a year earlier, both ahead of forecasts, although department-store and supermarket receipts slipped 0.1%. The stronger-than-anticipated Japanese figures follow a similar upside surprise in China earlier in July, when the National Bureau of Statistics reported a 6.8% year-on-year increase in industrial production for June, beating the 5.6% consensus. Output for the first half of 2025 is now 6.4% higher than a year ago. The twin gains from Asia’s two largest manufacturing hubs may ease concerns over the depth of the global industrial slowdown, though economists remain watchful for the impact of elevated U.S. tariffs and still-weak external demand.