— METI Forecast Index: Japan May Output +0.4% M/M, June +0.3%
— METI Repeats: Japan Output Continues To Show Upward Move

TOKYO (MNI) – Japanese industrial production rose 1.3% in April
from the previous month after rising 1.2% in March, backed by demand for
semiconductor products machinery and liquid crystal devices, data from
the Ministry of Economy, Trade and Industry released Monday showed.

The seasonally adjusted monthly gain in April came in weaker than
the consensus forecast for a 2.6% rise.

Still, it marked the second consecutive month-on-month increase and
the 13th gain in the last 14 months. Output has gained every month since
March 2009 except for a 0.6% fall in February this year.

Production has continued to improve from the sharp plunge seen from
late 2008 through early 2009. It rose a record +4.6% m/m in May last
year.

Compared with the year earlier level, production in April this year
jumped 25.9% y/y following a 31.8% rise in March, recovering from the
record 38.6% drop in February 2009. The 6.4% rise in December 2009 was
the first y/y gain in 15 months.

The April month-on-month output increase was led by rises in
general machinery, fabricated metals and other manufacturing.

Output is expected to continue rising in the coming months,
although at a slower pace.

METI’s survey of firms’ forecasts showed that production will rise
by 0.4% in May — an upward revision from the 0.3% fall estimated in
last month’s survey — before rising further by 0.3% in June (first
estimate).

Based on the latest data and the outlook for the next two months,
the Ministry of Economy, Trade and Industry (METI) repeated its
assessment adopted in June 2009 that: “Industrial Production continues
to show an upward movement.”

April-June industrial production would show a 2.2% rise from the
previous quarter if May and June figures come out as forecast. It would
be a fifth straight q/q increase following a 7.0% rise in the
January-March period.

Production in the first quarter of 2010 jumped 27.5% from a year
earlier, a reversal from the 4.3% drop in the fourth quarter of 2009 and
the 19.4% fall in the third quarter of 2009.

Other details from the latest data:

Shipments: Apr +1.6% m/m vs. Mar +2.0%, the second m/m rise in a
row. The rise was led by increases in general machinery, electronic
parts and devices as well as fabricated metals.

Inventories: Apr +0.3% m/m vs. Mar -1.6%, marking the first m/m
rise in two months. The increase in inventories was led by petroleum and
coal products, iron and steel as well as chemicals.

The inventory-to-shipments ratio: Apr +0.6% m/m vs. Mar -5.5%, the
first m/m rise in two months.

tokyo@marketnews.com
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