— Japan June Industrial Output +3.9% M/M Vs May +6.2%
— Japan June Industrial Output MNI Poll Median Forecast +4.3% M/M
— METI Forecast Index: Japan July Output +2.2% M/M, Aug +2.0%
— METI Repeats View: Japan Output Recovering From Earthquake Impact
— Japan June Industrial Output -1.6% Y/Y Vs May -5.5%
— Adds METI Official Comments in Paragraphs 7-8

TOKYO (MNI) – Japan’s industrial output rose for a third straight
month in June, showing steady progress in efforts by manufacturers to
fix quake-ravaged production facilities and supply chain networks
following the March 11 earthquake, government data showed Friday.

Production at the nation’s factories and mines rose a seasonally
adjusted 3.9% in June from the previous month, bringing the industrial
output index to 92.7, the highest since February this year when it stood
at 97.9.

In May, it posted a 6.2% rise, the second largest gain on record
after a 7.9% increase marked in March 1953.

The June headline figure came in slightly weaker than the median
forecast by economists in a Market News International survey for a 4.3%
rise.

The seasonally adjusted monthly rise in June was also below the
5.3% 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 2.2% m/m in July – revised up from the
0.5% rise estimated in the previous survey — and will increase further
by 2.0% in August (first estimate).

If METI’s survey forecasts for July and August output are met and
September output shows no change m/m, the output in the July-September
quarter would still rise 8.4% q/q, the first gain in five quarters, a
METI official told reporters.

The official also said he has not heard any comments from firms
expressing concern that the strong yen will hamper expectations for
output in July and August.

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

In the April-June quarter, industrial output fell 4.0% q/q, the
fourth consecutive quarterly drop, following a 2.0% decline in the
previous quarter.

In June, output of transportation equipment — mostly automobiles
— rose 18.5%, the second straight monthly rise, following a 36.6% gain
in May.

Output of mini vehicles with engine displacement of less than 660cc
rose 16.9% in June, while output of large passenger cars with engine
displacement of over 2000cc surged 28.5% and output of small passenger
cars with engine displacement of over 660cc but less than 2000cc jumped
17.9%.

Compared with year-earlier levels, production in June fell 1.6%,
marking a fourth straight y/y fall.

Other details from the latest data:

Shipments: June +8.5% m/m vs. +5.3% in May, posting a second
monthly rise. The June increase was the largest m/m gain on record, a
ministry official told reporters.

Inventories: June -2.8% vs. May +5.6%, marking the first fall in
three months.

The inventory-to-shipments ratio: June -7.3% vs. May -3.3%, showing
the second straight monthly fall.

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

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