Japan's economy may see a light at the end of the tunnel, and it's not a train
cnbc.com -- Dec 29
Japan's industrial production data, released on Wednesday, may have offered a light at the end of the tunnel for the long stagnant economy.

In November, industrial output rose 1.5 percent on month, just a tad below the Reuters forecast for a 1.6 percent rise, up from a flat reading in October.

But the big positive was in the details, particularly in inventories, which fell 1.5 percent on-month and 4.8 percent on-year.

Izumi Devalier, head of Japan economics at Bank of America-Merrill Lynch, told CNBC's "Squawk Box" on Wednesday that the print was generally "very positive," noting the sharp inventory drop.

"We're now down to levels we saw pretty much at the time of the VAT [value-added tax] hike. So inventories are very lean, which means that we should some pretty strong production numbers in the months ahead," she said.

As part of Japan Prime Minister Shinzo Abe's program to boost the country's long-moribund economy out of decades of deflation, dubbed Abenomics, the nation-wide consumption tax was boosted to 8 percent from 5 percent took effect in April 2014, in a move aimed at improving government finances.

But that clobbered the economy as consumers stopped spending after the hike, forcing the government to postpone a second sales tax increase, potentially until 2019.

News source: cnbc.com
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