Industrial production and retail sales rebounded in January, suggesting GDP growth will accelerate in the first quarter. IP rebounded 2.2% MoM in January (vs -0.1% in December, 5.5% market consensus) and retail sales also were up 4.1% (vs -2.0% in December, 1.5% market consensus). Details of both data were quite encouraging, as gains were widely spread. But also, the improvement in auto sector activity was quite impressive. Motor vehicle output rose for the second month, by 9.1% in January, following a 1.4% gain in December. Shipments rebounded to 8.8% after dropping in the previous two months. Motor vehicle retail sales surged 12.5%.
Stronger-than-expected retail sales data indicate that private consumption will lead growth, supported by strong wage growth. We believe lower inflation, helped by subsidies, will partly enhance consumers’ purchasing power. Also, the recent rally in the local equity market should contribute positively to consumption. Today’s data support our view that GDP is expected to accelerate in 1Q26, driven by solid exports and consumption.
AloJapan.com