— Japan May Industrial Output +5.7% M/M Vs Apr +1.6%
— Japan May Industrial Output MNI Poll Median Forecast +5.4% M/M
— Japan Industrial Output Posts 2nd M/M Rise in Row
— METI Forecast Index: Japan June Output +5.3% M/M, July +0.5%
— METI Upgrades View: Japan Output Recovering From Quake Impact
— Japan May Industrial Output -5.9% Y/Y Vs Apr Rev -13.6%

TOKYO (MNI) – Japan’s industrial output rose for a second straight
month in May as the nation’s manufacturers are rushing to fix
quake-ravaged production facilities and supply chain networks,
government data showed Wednesday.

Production at the nation’s factories and mines rose a seasonally
adjusted 5.7% in May from the previous month, bringing the industrial
output index to 88.8, following a revised rise of 1.6% in April.

It was the second largest gain on record after a 7.9% increase
marked in March 1953.

The nation’s industrial output posted a record drop of -15.5% in
March, hit by the March 11 earthquake disaster.

The May headline figure came in slightly stronger than the median
forecast by economists in a Market News International survey for a 5.4%
rise.

The seasonally adjusted monthly rise in May was below the 8.0% m/m
gain predicted in the ministry’s forecast survey released last month.

METI’s latest survey of firms’ forecasts showed that overall
production is expected to rise 5.3% m/m in June — revised down from the
7.7% rise estimated in the previous survey — and will increase further
by 0.5% in July (first estimate).

Based on the latest data and the outlook for the next two months,
METI upgraded its overall assessment, saying, “Industrial production is
recovering from the impact of the Great East Japan Earthquake.”

In the previous month, the ministry said industrial output “appears
to be sluggish at low levels due to the Great East Japan Earthquake but
it is expected to recover gradually.”

In May, output of transportation equipment — mostly automobiles —
rose 36.4% m/m in May following declines of 1.9% in April and 46.7% in
March, which was the largest drop on record.

Output of mini vehicles with engine displacement of less than 660cc
rose 48.0% in May, while output of large passenger cars with engine
displacement of over 2000cc surged 54.8% and output of small passenger
cars with engine displacement of over 660cc but less than 2000cc jumped
95.4.

Japan’s 12 major automakers are expected to see their plants
operate at 80% of capacity on average in June, according to a recent
Nikkei report.

As a result, total domestic auto output in fiscal 2011 is on course
to reach around 8 million units — only about 10%, or roughly 1 million
units, off from the 8.99 million units produced in fiscal 2010.

Meantime, the METI data showed that output of general machinery,
including semiconductor-processing equipment and flat panel-making
equipment, rose 5.3% in May following a 12.0% rise in April.

Compared with year-earlier levels, production in May fell 5.9%,
with the pace of decline decelerating from -13.6% in April and -13.1% in
March.

Other details from the latest data:

Shipments: May -5.3% m/m vs. April a revised -2.6%, posting the
first m/m rise in three months.

Inventories: May +5.1% vs. April +0.5%, marking the second straight
m/m rise.

The inventory-to-shipments ratio: May -4.9% vs. April a revised
+14.9%, showing the first m/m fall in three months.

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

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