Investing.com-- Japanese industrial production unexpectedly grew in December amid some recovery in manufacturing activity, while retail sales surged past expectations on strong private spending.
Industrial production grew 0.3% month-on-month in December, beating expectations for a decline of 0.1% and picking up from the 2.2% contraction seen in the prior month, Government data showed on Friday.
The December increase comes as several local exporters ramped up output and overseas shipments to front-load sales before the potential imposition of trade tariffs under U.S. President Donald Trump. Japan’s large automakers also saw some improvement in output amid clearing manufacturing disruptions.
On the consumer front, Japanese retail sales surged 3.7% year-on-year in December, more than expectations of 3.4% and much higher than the 2.8% rise seen in the prior month. The print also showed retail sales growing at their fastest pace since June 2024.
December’s reading was driven chiefly by strong holiday spending, and reflecting growing resilience in Japanese private spending, which is a key driver of the economy.
Retail spending has steadily trended higher over the past year, amid increasing wage growth in the country. Springtime wage negotiations between labor unions and large companies are expected to yield more wage increases this year.
The retail sales data comes just after inflation data for Tokyo showed a steady increase in inflation from strong spending.
The Bank of Japan had last week hiked interest rates on expectations of higher inflation.