Japan's October factory output seen up for second straight month

TOKYO (Reuters) - Japan's factory output is expected to rise in October for a second straight month helped by inventory adjustment, a Reuters poll found, but firms are still cautious on output because of weak Asian demand.

Separate data is expected to show retail sales were up slightly last month, although the trend of consumer spending lacks momentum because companies are reluctant to raise wages.

Industrial production is expected to have risen 1.9 percent in October from the previous month following a revised 1.1 percent gain in September, the poll of 20 analysts found."Factory output data for October will likely reflect and increase for inventory adjustment. Also, auto production seems to have increased," said Shuji Tonouchi, senior market economist at Mitsubishi UFJ Morgan Stanley.

"We expect factory output will be firm in October-December but a slow recovery in domestic demand is seen capping growth early next year. Exports will unlikely pick up much due to China's weak economy."

Focus will also be on manufacturers' forecasts for November and December output for clues as to how industrial production and economic growth in the fourth quarter will turn out.

The trade ministry will announce the factory output data including manufacturers' forecasts on Nov. 30 at 8:50 a.m. (Nov. 29 at 2350 GMT).

Retail sales, which will also be published on Monday, are forecast to have risen 0.8 percent in October from a year ago. In September, they dipped 0.1 percent.

"Consumer spending as a whole has been weak," said Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute.

"Although corporate profits are high, it is largely due to lower oil prices and a weak yen and it is unknown how long these supports will remain. So corporations are reluctant to raise fixed costs such as wages and capital spending."

Prime Minister Shinzo Abe is piling pressure on companies to increase investment and raise pay to generate economic growth as his "Abenomics" policy mix of monetary stimulus, public spending and structural reform continues to struggle for traction.

The economy shrank for a second straight quarter in July-September on a drop in inventories and weak capital spending, but a rebound in private consumption and exports offered some hope it is emerging from the doldrums.

(Reporting by Kaori Kaneko; Editing by Eric Meijer)