TOKYO (Reuters) – Japan’s core consumer prices fell for the ninth straight month in April as a record slump in cellphone fees offset rising energy prices, suggesting that weak demand and higher costs will weigh on a fragile economic recovery.

Separate data showed firms facing rising input costs and a slower expansion in factory activity in May, highlighting risks to an economy heavily reliant on the manufacturing sector.

The data underscores the challenge policymakers face in combating a resurgence in COVID-19 infections without hobbling an economy already lagging other major trading partners emerging from the pandemic-induced slump.

“Inflation fell in April but that was almost entirely due to a plunge in mobile phone tariffs,” said Tom Learmouth, Japan economist at Capital Economics.

“Looking past temporary distortions, we think underlying inflation will continue to rise a bit further, though unlike in some other advanced economies.”

The core consumer price index (CPI), which excludes the effect of volatile fresh food costs, fell 0.1% in April from a year earlier, smaller than a median market forecast for a 0.2% drop, government data showed on Friday and in line with March’s decline.

A record 26.5% in cellphone charges knocked 0.5% off core CPI, the data showed, as carriers heeded Prime Minister Yoshihide Suga’s calls to ease the burden on households.

By contrast, energy prices rose 0.7% in April, marking the first gain since January 2020 due to recent rises in crude oil costs and the base effect of last year’s slump.

Any decline in manufacturers’ profits would be a huge risk to firms’ capital expenditure plans and leave the economy without a driver as the country wrestles with the hit to consumption, analysts say.

Manufacturers saw the pace of input prices increases accelerate, while output price growth eased slightly, causing the widest gap between the two measures in nearly a decade, a private sector survey showed on Friday.

Japan’s economy shrank in the first quarter and analysts expect any rebound in April-June to be modest as new COVID-19 infections forced the government to re-introduce state of emergency curbs, hurting already weak consumption.

Inflation has barely picked up in Japan as companies remain wary of passing on higher costs to households, even as supply bottlenecks and labour shortages stoke inflation fears in the United States and some other advanced economies.

TOKYO (Reuters) – Global stocks headed for their first weekly gain in three amid a surge in commodity prices, while traders braced for a key U.S. jobs report later on Friday that could provide clues on when the Federal Reserve will ease back on monetary stimulus.

MSCI’s benchmark for global equity markets, which tracks stocks in 50 countries, edged up about 0.1%, on course for a 0.4% gain this week.

Its broadest index of Asia-Pacific shares outside Japan ticked up by about 0.4% on Friday, with China’s blue chips and Japan’s Nikkei each gaining about 0.3%.

Aluminum prices approached levels last seen in 2018 and copper flirted with 10-year peaks as investors bet on a rapid global recovery from the pandemic, led by the United States.

Overnight, Wall Street investors piled into economically-sensitive stocks on the reflation trade, driving the Dow Jones Industrial Average to a record high close on Thursday.

The Dow rose 0.9%, the S&P 500 gained 0.8% and the Nasdaq Composite added 0.4%.

S&P futures pointed to further gains, rising 0.2% on Friday.

U.S. shares rallied, led by financials and industrials, after a report showed the number of Americans filing new claims for unemployment benefits fell below 500,000 last week for the first since the COVID-19 pandemic started, signalling the labour market recovery entered a new phase amid a booming economy.

The Russell 1000 Value index gained 0.8%, outpacing the Russell 1000 Growth index, which rose 0.5%.

The focus now shifts to Friday’s non-farm payrolls report, with estimates ranging widely between 700,000 and more than 2 million jobs having been created in April.

“Get ready for payrolls, they could be huge,” Chris Weston, head of research at broker Pepperstone in Melbourne, wrote in a note for clients.

“The commodity space is the talk,” and financials are the “bull play” going into the payrolls report, he said.

The safe-haven dollar sank to its lowest level this week against a basket of major peers on Friday ahead of the jobs report, as firmness in global stock markets boosted risk appetite.

The dollar index dipped to 90.837, and was on track for a 0.4% decline this week.

Treasury yields hovered near the lowest level this month on Friday, further removing support for the greenback, after bond traders largely shrugged off the better-than-expected initial jobless claims data and waited for the non-farm payrolls report to provide market direction.

The 10-year Treasury note yielded 1.5714% early in the Asian session.

Gold headed for a 2.5% weekly gain, the most since December, as the weaker dollar and easing Treasury yields propelled the precious metal, an inflation hedge, above the key $1,800 an ounce psychological level to last trade at $1,813.54.