Industrial production in Japan was up 0.7% sequentially in August. Though the reading was below economists’ median estimate of 1.5%, it was the first output rise in four months as factories in Japan resumed work after heavy flood and rains.

On the release of the data, the Ministry of Internal Affairs and Communication’s (METI) assessment of industrial production was that it is “picking up slowly but shows signs of decrease in part.”

According to METI’s forecast for industrial production, the output is estimated to rise 2.7% in September and 1.7% in October. The industries in demand were transport equipment, business oriented machinery and plastics while electronic parts, fabricated metals and chemicals slipped.

Other Economic Indicators

Retail sales were up 0.9% from the previous month and 2.7% on a year-over-year basis. The unemployment rate was 2.4%, slightly below last month’s 2.5%. This turns out to be the first improvement after the 26-year low of 2.2% touched in May.

Consumer prices were up 1.3% in August on a yearly basis, exceeding the expectations of 1.1% and increasing from 1.2% in the month of August. The core CPI, which eliminates the cost of fresh foods, increased at an annualized rate of 1%, beyond the expected 0.9%

U.S. President Donald Trump and and Japan’s Prime Minister Shinzo Abe have agreed on Sep 26 to start trade talks. This proves as a much-needed aid to Japanese automakers as the proposed tariffs of 25% would be a severe hit for the export-driven economy. Nearly two-third of Japan’s trade surplus with the United States is due to auto exports.

In a joint statement, Washington and Tokyo said they were aiming for “a United States-Japan Trade Agreement on goods, as well as on other key areas including services, that can produce early achievements.”

“We can’t be overly optimistic about the outcome. The U.S. says it would refrain from imposing new tariffs on Japanese autos ‘while the talks are under way’, so this is not the final decision,” said Shoji Hirakawa, chief global strategist at Tokai Tokyo Research Institute.