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POLITICAL ECONOMY
Japan factory output falls, dents recovery hopes
by Staff Writers
Tokyo (AFP) March 30, 2012


Japan's factory output fell unexpectedly in February, data showed Friday, suggesting the recovery in the world's number three economy remained anaemic.

The fall confounded expectations for a third straight increase, although officials pointed out that manufacturers expect the slowdown to be temporary.

The 1.2 percent on-month decline in industrial production was triggered largely by slower automobile and semiconductor output, surprising observers who had tipped a 1.3 percent gain.

"The outcome was unexpected, as industries such as the electronic machinery industry that were supposed to show a gain in output turned out to be negative," said Yuichi Kodama, chief economist at Meiji Yasuda Life Insurance.

"The data confirm that the pace of recovery in production is slow, even though the upward momentum remains intact," he added.

The latest figure come despite Japanese firms revving up production in recent months as they recover from last year's quake-tsunami disaster and record flooding in Thailand, which disrupted production for manufacturers with plants there.

Japan's factories posted a revised 1.9 percent output increase in January and 3.8 percent in December.

And on Friday, the economy, trade and industry ministry said a survey of producers pointed to an expected 2.6 percent factory output rise in March and another increase of 0.7 percent in April.

"In general, output is recovering. You can say it's taking a breather after strong January figures," a ministry official said.

Officials have seized recent data indicating the economy was on the way to recovery, including a 32.9 billion yen trade surplus in February -- the first in five months -- and revised figures showing GDP contracted less than first thought in the last quarter of 2011.

Japan has announced a fresh plans to kickstart the economy as it struggles to fight its way out of decades of sluggish growth, including a near $25 billion to boost a loan programme from the Bank of Japan earlier this month.

That followed last month's decision by the bank to pump 10 trillion yen ($122 billion) more into markets that was aimed at combating inflation amid domestic and global uncertainty.

Japan said Friday that core inflation, which excludes volatile food prices, edged up 0.1 percent in February from the same month a year earlier, the first rise in five months.

But the rise in the core consumer price index was due mainly to higher electricity and transportation-related costs, according to the data.

Prices for the Tokyo metropolitan area, an early indicator of trends for the rest of Japan, fell 0.3 percent in March from the same period a year ago, matching forecasts.

Yoshiro Sato, an economist Credit Agricole in Tokyo, added that Japan's fight against deflation was far from over.

The country has been in a deflationary spiral for years, with a series of monetary and fiscal policy measures failing to reverse the trend.

"Although persistently elevated levels of crude oil prices would result in a positive core CPI inflation rate going forward, we maintain our view that there is a persistent underlying deflationary pressure in the economy," Sato said.

However unemployment eased to 4.5 percent in February, just beating forecasts of 4.6 percent, the internal affairs ministry said.

And household spending rose 2.3 percent year on year, beating expectations for a 0.2 percent fall, as government subsidies for fuel-efficient vehicles attracted shoppers.

-- Dow Jones Newswires contributed to this report --

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Japan auto production, exports rise in February
Tokyo (AFP) March 30, 2012 - Japanese automakers boosted production and vehicle exports in February, largely thanks to government subsidies for the purchase of fuel-efficient vehicles, an industry association said Friday.

Production of cars, trucks and buses in Japan jumped 19.7 percent on-year in February, the fifth consecutive monthly increase, according to the Japan Automobile Manufacturers Association.

Vehicle output rose to 952,268 in February from 795,656 in the same month a year earlier, the association said.

Meanwhile, exports of cars, trucks and buses increased 5.3 percent on-year to 454,449, the second consecutive rise.

Exports totalled in February, up from 431,562 in the same month a year earlier, the association said.

Japanese automakers, which were hammered by last year's quake-tsunami disaster and severe flooding in Thailand that crippled their supply chains, have been upping production on improved demand, partly driven by vehicle subsidies that are luring shoppers back into car showrooms.

The association previously said it expected the Japanese auto market to stay strong in the fiscal year starting in April on the back of the government offer and new model launches.



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POLITICAL ECONOMY
Japan auto production, exports rise in February
Tokyo (AFP) March 30, 2012
Japanese automakers boosted production and vehicle exports in February, largely thanks to government subsidies for the purchase of fuel-efficient vehicles, an industry association said Friday. Production of cars, trucks and buses in Japan jumped 19.7 percent on-year in February, the fifth consecutive monthly increase, according to the Japan Automobile Manufacturers Association. Vehicle o ... read more


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