Japan's industrial production grew at the fastest clip in nearly a year, as manufacturers sought to meet strong demand before the US implements new tariffs on autos and auto parts.

Factory output increased in February by 2.5% from January, the first advance in four months and marking the fastest gain since March last year, the Industry Ministry reported Monday. Economists had expected a 2.0% gain. Output rose 0.3% from a year ago, missing the consensus call of a 1.2% rise. 

The ministry also reported that retail sales increased 0.5% in February from January, while they gained 1.4% versus the previous year.

Monday's data are consistent with the Bank of Japan's assessment that the economy has recovered moderately even though there are pockets of weakness. Authorities will monitor closely to see if the rebound in output can be sustained in the face of rising tariffs in the US. US President Donald Trump signed an order last week to impose a 25% tariff on foreign-made vehicles effective April 3, with some auto parts to be added in May. 

Those duties are in addition to steel and aluminum tariffs introduced earlier this month and so-called reciprocal duties set to be announced early next month. 

The figures highlight the mixed dynamics at work in Japan's economy. The latest round of annual wage negotiations resulted in pledges by employers to offer the biggest wage increases in more than three decades, underscoring the competition to lure and retain staff in a tight labor market.

With the global economy likely to face major disruptions, Japan may need to rely more on domestic demand to sustain growth.

Source: Bloomberg