Japan's industrial production rebounded 2.8 percent on the month in July after slumping a downwardly revised 4.2 percent in June following a 3.6 percent gain in May. The increase was widespread (14 out of 15 industries) led by telecom equipment and production machines but it was softer than the median economist forecast of a 3.7 percent rise. The METI's survey of producers indicated output is set to show a setback, down 0.9 percent in August and a further 3.3 percent decline in September.

From a year earlier, factory output rebounded 2.7 percent, as largely expected, following a downwardly revised 7.9 percent plunge in June and a 1.1 percent rise in May.

The ministry upgraded its assessment, saying industrial output is"taking one step forward and one step back" Previously, it said, output"has weakened while taking one step forward and one step back."

Japan's industrial production is forecast to rebound a 3.7 percent on the month in July after slumping a downwardly revised 4.2 percent in June on a 3.6 percent gain in May. Solid overseas demand for semiconductor-making equipment and production machinery appears have cushioned the remaining impact of partial shutdown at some of Toyota factories following more revelations of false safety test records in June, this time at Toyota Motor itself, instead of its subsidiaries, as well as at other major automakers. The METI's survey of producers indicated that output is expected to rise 4.0 percent in July before partially rebounding 3.6 percent in July before rising a further 0.7% in August.

From a year earlier, factory output is expected to rebound 2.6 percent, following a downwardly revised 7.9 percent plunge in June and a 1.1 percent rise in May.

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.