Japan's industrial output dips unexpectedly
Japan's industrial output slipped unexpectedly for a second straight month in April as demand for automobiles cooled both at home and in the United States, a key market, the government said Wednesday.
By Agencies |
TOKYO: Japan's industrial output slipped unexpectedly for a second straight month in April as demand for automobiles cooled both at home and in the United States, a key market, the government said Wednesday.
Industrial production was down 0.1 per cent in April, disappointing market hopes for an increase of 0.5 per cent following a 0.3 per cent decline in March.
Year-on-year, however, output was up 2.3 per cent, according to the Ministry of Economy, Trade and Industry, which said production was still on "on a moderately upward trend."
"It is clear that production levels have already peaked, hit by slowing demand in the US and ongoing inventory adjustments in the IT sector," said Mitsubishi UFJ Securities strategist Tetsuro Sawano.
"But given solid exports to Europe and Asia, industrial production is not likely to slip into a serious falling cycle," Sawano added.
Easing concerns over the dip, the ministry predicted output would rise 1.8 per cent in May and 1.4 per cent in June.
But analysts also noted that some of the ministry's previous forecasts had turned out to be over-optimistic.
Norio Miyagawa, an economist at Shinko Research Institute, cautioned that output could remain weak for a while longer because of slowing demand for automobiles in the United States.
"The data for transport equipment, which cover auto makers, show the effect of the sluggish US economy. This is a consequence of stagnating car exports to the US from Japan.
"Also, the inventory adjustment for electronic parts and devices has not progressed much and the adjustment pace is slow," he said.
One of the big drops was in transportation equipment, which includes automakers. Production in the sector dropped 2.8 per cent in April from March as the output of small vehicles shrank 11.2 per cent.
On the other hand, production in the general machinery sector, which includes semiconductor equipment and flat panel manufacturers, rose 2.9 per cent, boosted by a 30.2 percent rise in output of chip-making equipment.
Output in the electronic machinery sector rose 6.2 per cent, led by a 44.2 per cent increase in testers for semiconductor chips and flat panel displays.
Analysts said the sluggish headline figure was unlikely to have a significant impact on when the central bank next raises interest rates.
Many economists are expecting another hike from the current level of 0.5 per cent some time in the second half of 2007, particularly after unemployment fell to a nine-year low of 3.8 per cent in April.
Industrial production was down 0.1 per cent in April, disappointing market hopes for an increase of 0.5 per cent following a 0.3 per cent decline in March.
Year-on-year, however, output was up 2.3 per cent, according to the Ministry of Economy, Trade and Industry, which said production was still on "on a moderately upward trend."
"It is clear that production levels have already peaked, hit by slowing demand in the US and ongoing inventory adjustments in the IT sector," said Mitsubishi UFJ Securities strategist Tetsuro Sawano.
"But given solid exports to Europe and Asia, industrial production is not likely to slip into a serious falling cycle," Sawano added.
Easing concerns over the dip, the ministry predicted output would rise 1.8 per cent in May and 1.4 per cent in June.
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But analysts also noted that some of the ministry's previous forecasts had turned out to be over-optimistic.
Norio Miyagawa, an economist at Shinko Research Institute, cautioned that output could remain weak for a while longer because of slowing demand for automobiles in the United States.
"The data for transport equipment, which cover auto makers, show the effect of the sluggish US economy. This is a consequence of stagnating car exports to the US from Japan.
"Also, the inventory adjustment for electronic parts and devices has not progressed much and the adjustment pace is slow," he said.
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One of the big drops was in transportation equipment, which includes automakers. Production in the sector dropped 2.8 per cent in April from March as the output of small vehicles shrank 11.2 per cent.
On the other hand, production in the general machinery sector, which includes semiconductor equipment and flat panel manufacturers, rose 2.9 per cent, boosted by a 30.2 percent rise in output of chip-making equipment.
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Output in the electronic machinery sector rose 6.2 per cent, led by a 44.2 per cent increase in testers for semiconductor chips and flat panel displays.
Analysts said the sluggish headline figure was unlikely to have a significant impact on when the central bank next raises interest rates.
Many economists are expecting another hike from the current level of 0.5 per cent some time in the second half of 2007, particularly after unemployment fell to a nine-year low of 3.8 per cent in April.
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