In the latter half of the year, however, the decline in external demand halted due to the depreciation of the yen, and, in addition, inventory adjustment progressed. As a result, the increase in final demand was reflected fully in production growth.
In fact, the year-to-year growth rate of production improved from less than 1 percent in the first half of 1996 to 4.4 percent in the latter half of 1996, a level consistent with the growth in demand. The increase in production appears to have led to a recovery in business fixed investment and employment in the latter half of 1996, through increased corporate profits.