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Japan factory output to post first rise in 4 mths as bottlenecks ease: Reuters poll

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TOKYO (Reuters) – Japan’s factory output probably rose in October for the first time since June, while retail sales likely posted the first growth in three months helped by eased COVID-19 restrictions, a Reuters poll showed.

The stronger data suggests the recovery is gaining more traction, boding well for policymakers who hope a burst of household spending and solid business activity will bring the economy back to pre-pandemic levels by early 2022. Japan’s recovery from the health crisis has been tepid compared with other major economies.

The world’s third-largest economy contracted much faster than expected in July-September, but is expected to rebound in the current quarter. The government last week announced a record $490 billion economic stimulus to sustain the recovery.

Industrial output data was expected to expand 1.8% month-on-month in October, bouncing from a 5.4% fall the previous month, according to a Reuters poll of 18 economists.

“Shortage in car components is gradually easing,” said Shumpei Fujita, an economist at Mitsubishi UFJ (NYSE:MUFG) Resarch and Consulting.

Manufacturers of cars – Japan’s No.1 export item – such as Toyota Motor (NYSE:TM) and Nissan (OTC:NSANY) Motor have slashed production plans due to supply chain disruptions in coronavirus-hit Asian factories. The country’s industrial output has been in contraction for three months since July.

With automakers’ output cuts appearing to have already moved past the worst period, production as a whole is on the path to recovery, Fujita said.

Separate data is likely to show retail sales grew 1.1% in October from a year earlier, following a 0.6% fall in September, the poll showed.

Analysts said retail sales have gained from coronavirus curbs being lifted in October, yet a full recovery in sectors battered hard by the pandemic such as face-to-face services will take more time.

The government will release retail sales data on Nov. 29 at 8:50 a.m. (2350 GMT, Nov. 28) and factory output figures on Nov. 30 at 8:50 a.m. (2350 GMT, Nov. 29.)

Jobs data, due on Nov. 30 at 8:30 a.m. (2330 GMT, Nov. 29), is forecast to show the unemployment rate standing at 2.8% and the job-to-applicants ratio at 1.17 in October, mostly unchanged from the prior month, the poll showed.

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