— METI Forecast Index: Japan Mar Output +1.4% M/M, Apr -0.1%
— METI Repeats View: Japan Output Continues To Show Upward Move

TOKYO (MNI) – Japanese industrial production fell 0.9% in January
from the previous month, largely in line with forecasts, as lower demand
for toys, electronic devices and small passenger cars more than offset
higher demand for general machinery and steel, data from the Ministry of
Economy, Trade and Industry released Tuesday showed.

The seasonally adjusted monthly drop came in slightly weaker than
the consensus forecast for a 0.4% decline.

Output posted the first month-on-month drop in 12 months in
February after surging 2.7% in January. Production had already improved
from the sharp plunge seen from late 2008 through early 2009. It rose a
record +5.9% m/m in April last year.

Compared to the year before level, production jumped 31.3% y/y in
February, following a 18.5% rise in January and recovering from the
record 38.4% drop in February 2009. The 5.1% rise in December 2009 was
the first y/y gain in 15 months.

The February month-on-month output decrease was led by drops in
transport equipment as well as information and communication electronics
equipment.

Output is expected to show fluctuations in the coming two months.
METI’s survey of firms’ forecasts showed that production will rebound by
1.4% in March — down from the 1.6% gain estimated in last month’s
survey — before edging down by 0.1% in April (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.”

Other details from the latest data:

Shipments: Feb -0.2% m/m vs. Jan. +2.7%, the first m/m drop in 12
months. The decline was led by decreases in chemicals excluding drugs,
information and communication electronics equipment as well as
electrical machinery.

Inventories: Feb +1.0% m/m vs. Jan +1.1%, marking the second
straight m/m rise. The increase in inventory is mainly led by
information and communication electronics equipment, iron and steel as
well as petroleum and coal products.

The inventory-to-shipments ratio: Feb +1.8% m/m vs. Jan +1.1%, also
up for two months in a row.

tokyo@marketnews.com
** Market News International Tokyo Newsroom: 81-3-5403-4833 **

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