Clear signs of recovery, even in Japan

The world's major economies are now all showing signs of recovery.

Last week, the Organisation for Economic Co-operation and Development released its report on composite leading indicators which showed that there were stronger signs of recovery in most of the OECD economies. "Clear signals of recovery are now visible in all major seven economies, in particular in France and Italy, as well as in China, India and Russia," the report said.

Even Japan, one of the worst-hit economies in the developed world, has now moved out of recession.

Last week, the Cabinet Office reported that the Japanese economy grew 0.6 percent in the second quarter. Although this was less than the initially-reported 0.9 percent growth, it marked the first quarter of expansion in the economy after four consecutive quarterly contractions.

Japan's economic recovery is likely to continue in the third quarter. Today, the Ministry of Economy, Trade and Industry reported that industrial production in Japan increased 2.1 percent in July. This was the fifth consecutive monthly increase in industrial production and marked the highest level of output in 2009.

Meanwhile, the global economic recovery has helped Japan's exports to recover. A report from the Ministry of Finance last week showed that exports rose 1.4 percent in July, also a fifth consecutive month of increase.

Consumer spending in Japan is also recovering. Household consumption rose 0.8 percent in the second quarter and a report last week from the Cabinet Office showed that the consumer confidence index rose to 40.4 in August from 39.7 in July, an eighth straight month of increase.

Still, there have been signs too that the recovery will be difficult. The Cabinet Office also reported last week that core private sector machinery orders plunged 9.3 percent in July while its economy watchers index, a survey of economically-sensitive workers, declined to 41.7 in August from 42.4 in July.

Nevertheless, for now, it is clear that Japan's economy, like the other major economies, is showing signs of recovery.

Update on 15 September: Japanese industrial production in July revised to show 2.1 percent increase.