Japan’s industrial production rebounded in June amid a resilient economic recovery, capping a quarterly gain.

Factory output rose 2% from the previous month, when it dropped 2.2%, according to the industry ministry Monday. Economists had forecast a 2.4% gain. The gauge rose 1.3% in the second quarter from the first one.

The data points to an ongoing recovery in the world’s third largest economy, despite slowdown signs abroad. The nation’s trade balance swung to its first surplus since July 2021 last month, with exports holding up while imports slid on the back of falling fuel prices.

Another report showed that retail sales fell 0.4% in June from May, compared with a 0.7% decline forecast by analysts. Outlays rose 5.9% from a year ago.

A return of overseas tourists has been boosting consumption in Japan partly because the weaker yen increases their spending power. Last month the number of visitors from abroad was back to more than 70% of pre-pandemic levels, returning to above 2 million, according to the Japan National Tourism Organization.

What Bloomberg Economics Says...

“Looking ahead, production will likely hover around June’s level in July. Increased chip supplies will probably help car manufacturers build more vehicles, but slowdowns in overseas markets will likely weigh on exports.”

— Taro Kimura, economist

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But domestic shoppers face mixed circumstances in that wages are growing while inflation continues to outpace a rise in their paychecks. Tokyo inflation came in slightly stronger than expected Friday, while the latest readings for labor market data are due on Tuesday.

--With assistance from Tomoko Sato.

(Updates with more details from the report, economist comments)