Japan's industrial production post a stronger-than-expected 4.5 percent rebound on the month in February, thanks to easing parts supply constraints for the auto industry, after slumping at a faster pace of 5.3 percent in January, when automakers suffered parts shortages and many other industries were hit by weaker global and domestic demand, preliminary data released Friday by the Ministry of Economy, Trade and Industry showed.

The drag from suspended shipments during the lunar new year holidays in some parts of Asia in January appeared to have eased in February. From a year earlier, however, factory output marked a fourth straight decline, but the 0.6 percent dip was smaller than expected.

The METI's survey of producers indicated that output is likely to post a slight 0.3 percent drop on the month in March before marking a solid 4.4 percent rebound in April.

The ministry maintained its view after downgrading it recently, saying industrial output"has weakened." Previously, it had said, production was"picking up gradually but also showing weakness in some areas." The METI repeated that it will keep a close watch on the impact of a rise in Covid cases on domestic and global growth as well as parts and materials supply shortages and rising prices.

The Econoday Consensus Divergence Index stood at plus 29, above zero, which indicates the Japanese economy is performing better than expected after outperforming earlier. Excluding the impact of inflation, the index was at plus 35

Japanese policymakers believe the economy needs continued monetary and fiscal policy support to achieve sustainable wage growth and stable 2 percent inflation.

Japan's industrial production is expected to post a modest rebound of 2.7 percent on the month in February after slumping a downwardly revised 5.3 percent in January, when automakers suffered parts shortages and many other industries were hit by weaker global and domestic demand. The drag from suspended shipments during the lunar new year holidays in some parts of Asia in January appeared to have eased in February. From a year earlier, factory output is forecast to mark a fourth straight decline, down 1.9 percent, after slipping 3.1 percent.

Industrial Production measures the physical output of the nation's factories, mines and utilities. Factories manufacture various products, and the industrial production indexes have been prepared as a comprehensive indicator of wide-ranging production activities for such products and are regarded as some of the most important among economic indexes.

Investors want to keep their finger on the pulse of the economy because it usually dictates how various types of investments will perform. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers more subdued growth that won't lead to inflationary pressures. By tracking economic data such as industrial production, investors will know what the economic backdrop is for these markets and their portfolios.

Industrial production provides key industry data for this export-dependent economy. The data are issued twice a month-a preliminary estimate at the end of the month for the preceding month and a revised estimate about two weeks later. All products, whether sold domestically or abroad, are included in the calculation of industrial production. Industrial production is highly sensitive to the business cycle and can often predict future changes in employment, earnings and income. For these reasons industrial production is considered a reliable leading indicator that conveys information about the overall health of the economy. This report has a big influence on market behavior. In any given month, one can see whether capital goods or consumer goods are growing more rapidly. Are manufacturers still producing construction supplies and other materials? This detailed report shows which sectors of the economy are growing and which are not.