— Japan Jan Industrial Output +2.0% M/M; MNI Forecast +1.5%
— METI Forecast Index: Japan Feb Output +1.7% M/M, Mar +1.7%
— METI Upgrades View: Japan Output Shows Signs of Picking up

TOKYO (MNI) – Japan’s industrial output rose an above-forecast 2.0%
in January as car and electronics makers continued playing catchup
following last year’s supply chain breakdown in flood-hit Thailand, data
from the Ministry of Economy, Industry and Trade showed Wednesday.

Japanese carmakers also boosted output after the government resumed
subsidies for buying low-emission vehicles in December.

Production at the nation’s factories and mines rose a seasonally
adjusted 2.0% in January from the previous month after surging 3.8% in
December. This pushed up the industrial output index to 95.3, but it was
still below the pre-disaster level of 97.9 in February 2011.

The January headline figure came in stronger than the median
forecast for a 1.5% rise in a Market News International survey of
economists, while it was slightly weaker than a 2.5% gain predicted in
the previous month’s METI report.

METI’s latest survey of firms’ forecasts showed that overall
production is expected to rise 1.7% m/m in February — revised up from
the 1.2% gain estimated in the previous survey — before rising 1.7% in
March (first estimate).

Based on the latest data and the outlook for the next two months,
METI upgraded its overall assessment for the first time since May 2011,
saying: “Industrial output is showing signs of picking up.”

Until last month, the government said that industrial production
“appears to be flat.”

Sentiment among some industries including chipmakers and steel
mills is improving, reflecting brighter global growth prospects, a METI
official told reporters.

Shipments slipped 0.7% January, posting the first drop in two
months, but the METI official that it seemed to be a temporary pullback
after a sharp 4.6% rise in December.

In January, output of transportation equipment (mostly
automobiles), which was hit hard by the massive flooding in Thailand
last year, rose 3.3% from the previous month, marking the second
straight rise after a 13.2% surge in December.

In December the government revived subsidies for on buying
low-emission vehicles after ending the program in September 2010, which
caused a year-long stagnation of domestic vehicle sales.

Data released on Tuesday showed that Japan’s retail sales
unexpectedly rose in January from a year earlier, led by a 24.3% surge
in automobile sales.

The recent rebound in production also reflects brighter signs in
the global economy. Trade data have shown that Japan’s shipments to the
U.S. market rose for a third straight month in January while overall
Japanese exports posted a fourth consecutive year-on-year drop.

Compared with year-earlier levels, Japan’s industrial production in
January fell 1.2%, marking the third straight drop, but the pace of
decline decelerated from a 4.3% fall in December.

Other details from the latest data:

Shipments: Jan -0.7% m/m Vs. Dec +4.6%, the first fall in two
months.

Inventories: Jan +3.1% m/m Vs. Dec -2.9%, the first rise in three
months.

The inventory-to-shipments ratio: Jan +1.2% m/m Vs. Dec -3.7%, the
first rise in four months.

tokyo@marketnews.com
** Market News International Tokyo Newsroom: 81-3-5403-4835 **

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