Japan Factory Output Edges Up Despite Middle East Headwinds

Japan's factory output has shown resilience in the face of headwinds from the Middle East conflict. The country's industrial production rose 0.1% in July, beating expectations of a 0.7% drop.

The continued expansion suggests manufacturers weathered uncertainty better than expected. Businesses have faced rising operating costs due to supply-chain disruptions but the weak yen has helped soften that blow for exporters.

Activity in the manufacturing sector has been expansionary every month in 2026, with July's advance following a robust 1.9% jump in June and a 4.1% increase from a year earlier.

The positive signal extends to consumption, as retail sales rose 2.4% in July from June, after seven consecutive months of decline.