February, 27, 2010

Japan showed fresh signs of recovery on Friday as factory output rose due to brisk demand from the rest of Asia, but a drop in consumer prices highlighted deflation remained a key threat in the world's second-largest economy.As overseas demand - especially from China - for Japan's cars, electronics and other goods picked up, the country's industrial output rose 2.5 per cent in January from December, marking the 11th straight monthly gain, official figures showed on Friday.

The fresh data comes two days after the government said exports grew at the fastest pace for 30 years in January. However, deflation was still burdening the economy, as core consumer prices fell 1.3 per cent in January from a year earlier, marking the 11th straight month of decline, separate data showed on Friday.Japan's Finance Minister Naoto Kan said on Friday the government had to do more to combat deflation, which cuts into corporate profits and leads consumers to delay purchases as they wait for further price drops.

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