2014.10.2902:42:05UTC+00Japan’s industrial output posts biggest advance in eight months

Industrial production in Japan has recorded its best improvement in eight months, indicating that business are starting to recover from the effects of a sales tax hike earlier in the year.

Data from the trade ministry showed that Japan’s output expanded by 2.7% in September compared to the previous month, surpassing economists’ median forecast of a 2.2% climb. The improvement pares the loss for the third quarter down to 1.9%, following a 3.8% decline during the three month period of April to June.

Economist Masaki Kuwahara from Tokyo’s Nomura Securities Co. says that, “Today’s data is basically positive for the Japanese economy. Outlook figures suggest that production will return to growth in the current quarter.”

Japanese Prime Minister Shinzo Abe is currently mulling over data in order to determine whether its economy can bear another tax increase next after the previous one in April plunged the country into the sharpest contraction in five years. Haruhiko Kuroda, the governor of the Bank of Japan, said that any delays could bring additional risks due to the loss in confidence, while a finance official claimed that Japan’s economy is not yet strong enough.

Shipments last month also rose by 4.3% to reach a five month high, while inventories fell by 0.8% from the amount in August, which was the highest in over five years. The production of equipment for transportation including cars, machinery, and electronic parts were the primary contributors to the improvement, said the trade ministry.