Japan inflation, output data seen confirming steady recovery

By Tetsushi Kajimoto

TOKYO (Reuters) - Japanese consumer inflation likely accelerated to a fresh five-year high and factory output probably rose for a second straight month in October, a Reuters poll showed, underscoring a steady recovery in the world's third-largest economy.

In other data due next Friday in Tokyo, the unemployment rate likely fell below 4 percent and the availability of jobs is seen edging up to a 5-1/2-year high, according to the poll, adding to evidence that the economic recovery is broadening.

The results would bode well for Prime Minister Shinzo Abe's goal of sustaining growth and conquering 15 years of deflation under his "Abenomics" policies, as rising output and demand for workers should help increase wages and consumer spending.

"Prices as a whole have stopped falling with broader goods and core consumer prices seen continuing a moderate rise," economists at Shinkin Central Bank said in the Reuters poll.

"Factory output is rising on the back of new car sales and housing investment, and it is expected to remain firm due to a buying rush by consumers ahead of the sales tax hike next April and the weak yen" that is supporting exports, they said.

The core consumer price index, which excludes prices of fresh food but includes oil products, likely rose 0.9 percent in October from a year earlier. That would mark a fifth straight month of gains and the biggest year-on-year growth since November 2008.

Industrial output is forecast to have risen 2.0 percent in October from the previous month, after a 1.3 percent gain in September. Investors will also be closely watching manufacturers' output forecasts, to be published along with the October data, for clues on the strength of factory activity through the end of the year.

The jobless rate likely fell to 3.9 percent in October from 4.0 percent in the prior month. The availability of jobs, or the jobs-to-applicants ratio, is expected to have risen to 0.96 in October from 0.95 in the previous month, a level not seen since April 2008, the poll showed.

Meanwhile, household spending is expected to have risen 0.9 percent in October from a year earlier, up for a second consecutive month.

The CPI, jobs and spending statistics are due at 8:30 a.m. on Friday in Tokyo (2330 GMT Thursday) and the industrial production data is scheduled for release at 8:50 a.m. Friday (2350 GMT Thursday).

Elsewhere, data at 2 p.m. (0500 GMT) on Friday is expected to show housing starts rose 4.3 percent in October from a year earlier, slowing from a 19.4 percent rise in the previous month but marking a 14th straight month of gains.

Japan's economy slowed in the quarter from July through September as exports and household spending moderated, but economists expect growth to accelerate this quarter as exports recover and private consumption firms up.

At its November 20-21 policy review, the Bank of Japan maintained the massive monetary stimulus put in place in April, under which it aims to meet 2 percent inflation in roughly two years by doubling base money through asset purchases.

(Reporting by Tetsushi Kajimoto; Editing by Chris Gallagher)