Industrial output across Japan continued to increase for the fourth consecutive month during September, a sign that factory activity has started recovering after the coronavirus pandemic-driven shutdowns. According to data released by the government, industrial output grew by 4% MoM in the month of September, beating economists’ forecast for a 3.2% growth instead.

Capital goods’ output increased by 2.6% MoM during September after recording a sharp decline by 4.5% in the previous month. This is a key measure of capital spending, which indicates business confidence among companies in the country.

Manufacturers are upbeat about industrial output rising into October as well, but the pace could ease by November. According to the Ministry of Economy, Trade and Industry’s survey, industrial output could rise by 4.5% in October and then by 1.2% in November.

The news could lend a boost to the Japanese economy that has fallen into recession even before the pandemic affected the world. Economists widely expect the economy to bounce back towards growth between July and September, as a result of a rebound in exports and industrial output. However, a reduction in capital spending is likely to weigh on economic growth with businesses putting off investment plans after the pandemic reduced their corporate earnings.