Japan grows at 5.5 percent rate in fourth quarter

The world economy continues to grow and -- unusually in recent years -- it is being led by Japan.

The Japanese economy stepped up a gear with 5.5 percent annualized growth in the fourth quarter of 2005 as rising consumer spending helped keep the recovery firmly on track.

Japan's economy grew four times faster than the United States which saw annualized growth of 1.1 percent in the same period.

It was the fourth straight positive quarter and reinforced hopes that the world's second-largest economy is finally on a sustainable recovery path after a slump stretching back over a decade.

Quarter-on-quarter, Japan's gross domestic product (GDP) grew 1.4 percent, beating market expectations for 1.2 percent and significantly stronger than the 0.3 percent pace seen in the third quarter of 2005.

In Europe, industrial production continued to trend up in December.

Seasonally adjusted industrial production rose by 0.1% in the euro-zone in December 2005 compared to November. Production grew by 1.4% in November, but fell by 0.7% in October. Output in the EU25 rose by 0.3% in December 2005, after an increase of 1.1% in November and a decrease of 0.6% in October.

In December 2005 compared to December 2004, industrial production rose by 2.5% in both the euro-zone and the EU25.

And in the US, producer prices continued to rise in January.

The Labor Department said U.S. producer prices rose by 0.3 percent in January while core prices excluding food and energy climbed 0.4 percent. The latter was twice market expectations and the fastest wholesale inflation rate since January 2005.

Not everything is hot, though.

The University of Michigan said its preliminary index of consumer sentiment in February fell to 87.4 from 91.2 in late January.