— See Separate Table For Details of Individual Forecasts

TOKYO (MNI) – Japanese industrial production appears to have risen
4.0% on month in January, which would mark the third straight m/m rise,
on a continued recovery in passenger car output and a rebound in general
machinery demand, according to the median forecast of analysts surveyed
by Market News International.

The Ministry of Economy, Trade and Industry will release the data
at 0850 JST on Monday, Feb. 28 (2350 GMT Sunday).

Industrial output rose 3.3% in December from the previous month
after gaining 1.0% in November.

On a seasonally adjusted basis, the January production index is
seen rising to 98.6 against 100 for the 2005 base year, the highest
level since 100.1 marked in October 2008, a month after the collapse of
Lehman Brothers.

The METI has forecast that January output will increase by 5.7%
m/m, led mainly by rises in transport machinery (+15.6%), general
machinery (+10.3%) and iron and steel (+5.7%).

“Growth in January output is expected to have fallen short of
METI’s projection mainly because exports in January were sluggish,” said
Taro Saito, senior economist at NLI Research Institute.

Japan’s export volume fell a seasonally adjusted 2.9% m/m in
January, the first drop in three month, according to the Cabinet Office.

But other data released recently indicate that the January output
will show a steady m/m gain.

Crude steel production in January rose 10.7% on year, accelerating
from the 2.5% rise in December, data released by the Japan Iron and
Steel Federation showed.

Demand for electricity from major industrial users rose 5.7% on
year in January, with the pace of growth accelerating from +5.2% y/y in
December, the Federation of Electric Power Companies said.

A key market focus will be on the outlook for February and March
output to be released by METI together with January figures.

Economists expect industrial output to show a strong 7.5% rise in
January-March from the previous quarter, the first rise in three
quarters. But their outlook may be revised, depending on METI’s
projections for February and March.

Looking ahead, Kyohei Morita, chief economist at Barclays Capital
Japan, forecast that output will increase in Q1 onward. “Exports of IT
goods to Asia will gradually increase, since excess inventories of these
goods in Taiwan and South Korea have been reduced.”

But Naoki Minegishi, an economist at Shinkin Central Bank, warned
that there are several concerns about future output, such the impact of
monetary tightening in China, the surge in commodity prices and unrest
in the Middle East and North Africa.

Japan’s longest post-war economic expansion from February 2001 to
October 2007 ended partly due to the worsening in terms of trade sparked
by soaring energy and commodity prices.

Prices of imported crude oil averaged $91.7 a barrel in January,
the highest level since $102.7 marked in October 2008. It hit a record
high of $135.7 in August 2008.

Based on the latest data and the outlook for the January and
February output, METI upgraded its assessment in a report for December,
saying that industrial production “is showing signs of an upward
movement.”

skodama@marketnews.com
** Market News International Tokyo Newsroom: 81-3-5403-4838 **

[TOPICS: M$J$$$,M$A$$$,MAJDS$]