Japan's industrial output up for 4th straight month - Mainichi Daily News

Nissan Motor Co.'s Oppama factory in Yokosuka, Kanagawa Prefecture, is seen on July 2. (Mainichi)

TOKYO (Kyodo) -- Japan's industrial production rose 0.6 percent in July from the previous month for the fourth straight monthly rise, in a fresh sign of recovery from the aftermath of the massive March 11 earthquake and tsunami, government data showed Wednesday.

Growth, however, decelerated from the 3.8 percent rise in June, and manufacturers anticipated that output will grow 2.8 percent in August but fall 2.4 percent in September, the Ministry of Economy, Trade and Industry said in a preliminary report.

The ministry maintained its basic assessment, saying that output is "on a recovery trend."

Japan's production has been recovering from a deep slump caused by the March natural calamities, which largely affected major auto and high-tech makers by disrupting the nationwide supply chain of industrial products.

But increasing concerns over the outlook of overseas economies and the yen's strength, coming close to postwar record highs, cast a cloud over the Japanese economy, with these factors believed to be major reasons behind the somber production outlook for September, Takahide Kiuchi, chief economist at Nomura Securities Co., said.

"The environment for exports is deteriorating," he said, adding that there is a growing risk Japan's industrial output will not regain pre-disaster levels until next year.

For July, the index of output at factories and mines stood at 93.2 against the base of 100 for 2005, the ministry said. Figures are adjusted for seasonal factors.

By sector, output by transport equipment makers, including automakers, rose 5.3 percent, marking the third consecutive month of growth.

Output of electronic information and communications equipment, such as mobile phones and personal computers, shot up 15.7 percent and that of general machinery makers gained 0.6 percent.

On the other hand, output of electronic parts and devices fell 3.4 percent in reaction to a recent surge in demand for parts used in liquid crystal display TVs ahead of Japan's switch to terrestrial digital broadcasting in late July.

Power shortage concerns, stemming from the Fukushima nuclear crisis, triggered by the March disaster, were not extensively cited as a reason behind the decelerated output growth for July by surveyed manufacturers, a ministry official said in briefing the data.

The index of industrial shipments grew 0.2 percent to 94.5 and that of industrial inventories was down 0.2 percent to 100.6.

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Japan factory output up for fourth straight month

By TOMOKO A. HOSAKA, Associated Press Tomoko A. Hosaka, Associated Press – 2 hrs 37 mins ago

TOKYO – Japan's industrial production fell short of expectations in July as a strong yen, power shortages and slowing global economy compounded the struggle to recover from the March 11 earthquake and tsunami.

The Ministry of Economy, Trade and Industry said Wednesday that industrial production climbed 0.6 percent from the previous month. Its outlook for coming months is mixed.

The increase in July missed forecasts, reflecting the growing pressures of a strong yen and an uncertain global economy. Analysts also blamed electricity shortages around Tokyo and northern Japan.

In its previous report, the ministry had projected a 2.2 percent rise in July following a robust 3.8 percent gain in June.

The Nikkei 225 stock average closed little changed at 8,955.20 while most other Asian markets gained.

The world's No. 3 economy relies on exports to drive growth, and any downturn in overseas demand threatens to undermine progress made since the disaster. The tsunami wiped out much of Japan's northeast coast, damaging factories and disrupting critical supply chains for key Japanese industries like autos and electronics.

The auto industry has yet to completely bounce back. The Japan Automobile Manufacturers Association said in a separate report Wednesday that industrywide production in July fell 8.9 percent from the same month last year.

The chairman of the group, Toshiyuki Shiba, issued a statement Tuesday calling on Japan's new Prime Minister Yoshihiko Noda to revitalize the economy. The auto industry faces "unprecedented" yen strength, which is making domestic production increasingly difficult and threatening to trigger a hollowing out of Japanese industry.

Shiba, who is also chief operating officer at Nissan Motor Co., said the industry seeks steps to weaken the yen, expand economic partnership agreements and ensure a stable supply of electricity.

The outlook for the coming months is mixed. The ministry expects production to jump 2.8 percent in August, then fall 2.4 percent in September.

Shipments in July rose 0.2 percent, and inventories slipped 0.2 percent, the ministry said.

The projected decline in September came as a "significant shock" for Masamichi Adachi, senior economist at JPMorgan Securities Japan, who had expected gains to accelerate.

"It decisively poses a downside risk to our bullish view" on overall economic growth in the fourth quarter, he said in a report.

The direction of Japan's economy will depend in large part on the health of exports, which appear to be weakening, Adachi said.

Government data earlier this month showed that exports contracted for the fifth straight month in July.

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Japan exports fall for 5th straight month in July

By TOMOKO A. HOSAKA, Associated Press Tomoko A. Hosaka, Associated Press – Thu Aug 18, 1:51 am ET

TOKYO – Japan's exports fell for the fifth straight month in July as the country contends with a strong yen and the ongoing impact of the March earthquake and tsunami.

Exports fell 3.3 percent from a year earlier to 5.78 trillion yen ($75.6 billion), the government said Thursday.

Exports are a key driver of the world's No. 3 economy, and the country is hoping that overseas demand will help it bounce back from the March 11 disaster. Data earlier this week showed that Japan's economy is still mired in recession, shrinking for the third straight quarter in the April-June period.

The earthquake and tsunami damaged or destroyed factories in northeast Japan, which led to serious parts shortages for manufacturers in the auto and electronics industries. While the country has made progress in restoring production, it now faces new threats.

A surging yen, which has recently tested record highs against the dollar, is painful for Japan's exporters. It reduces the value of their foreign earnings and makes Japanese goods more expensive in overseas markets.

The yen is hurting the bottom lines of companies like Nintendo Co., which makes 80 percent of its sales outside of Japan. It is also forcing manufacturers like Panasonic Corp. and Hitachi Ltd. to consider shifting more production overseas.

Japan intervened in currency markets earlier this month to try to reverse the yen's climb. The decision to sell the yen and buy the dollar worked initially, sending the greenback toward 80 yen. But the dollar has been weighed by the dimming outlook for U.S. economy and is back down to mid 76-yen levels.

Monetary authorities could turn to intervention again if the yen continues to strengthen.

The country's top financial diplomat, Takehiko Nakao, on Thursday blamed speculators for the yen's sharp gains and described recent moves as "violent."

"We remain alert," said Nakao, the vice finance minister for international affairs, according to Kyodo News agency.

Along with foreign exchange pressures, Japanese exports are feeling the strain of a lethargic global economy, particularly in the U.S. and Europe.

Shipments to the U.S. fell 8.2 percent in July, while those to China were down 1 percent. Exports to the European Union rose 6 percent.

Motor vehicle exports to the world fell 3.8 percent in value terms, and electrical machinery shipments declined 8.3 percent.

The finance ministry said imports in July rose 9.9 percent to 5.71 trillion yen, resulting in a trade surplus of 72.5 billion yen.

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Japan economy contracts for third straight quarter (AP)

TOKYO – Japan's economy contracted for a third straight quarter as consumer spending and factory production continued to suffer in the aftermath of the March earthquake and tsunami.

Real gross domestic product — a measure of the value of all goods and services produced domestically — contracted at an annualized rate of 1.3 percent in the April-June quarter, the Cabinet Office said Monday.

The figures did provide a glimmer of optimism as a much bigger contraction was expected. A Kyodo News agency survey of analysts had forecast the economy to shrink 2.6 percent.

The March 11 earthquake and tsunami killed thousands of people and wiped out large parts of Japan's northern coast. The disasters damaged many factories in the region, causing severe shortages of parts and components for manufacturers across the country, including automakers.

The tsunami also crippled a nuclear power plant and caused a widespread power crunches, especially in the Tokyo region, adding to the headaches faced by businesses and households.

The Cabinet office said GDP fell 0.3 percent quarter on quarter. Consumer spending, which accounts for some 60 percent of the economy, dipped 0.1 percent. Capital investment by companies was up just 0.2 percent from the previous quarter.

The figures showed that the nation's economy slumped in wide range of areas and still needs close attention, Finance Minister Yoshihiko Noda said.

"We must steer the economy very carefully because we still have downside risks including the problem of the rising yen," Noda told a news conference.

Japan's economy was struggling even before the disaster. The country lost its place as the world's No. 2 economy to China last year. It has faced a slew of problems including years of deflation, a rapidly aging and shrinking population and ballooning public debt.

Japanese companies have increasingly relied on overseas markets to drive growth and offset lackluster demand at home. But exports dropped 4.9 percent during the latest quarter, the sharpest decline in more than two years, due to a strong yen, slowing overseas economies and a slump in domestic industrial production.

A strong yen is painful for Japan because it reduces the value of foreign earnings for exporters like auto and electronics manufacturers, and makes Japanese goods more expensive in overseas markets.

The dollar hit a record post-World War II low of 76.25 yen in the days following the March 11 earthquake and tsunami.

Economy Minister Kaoru Yosano was more upbeat about the quarterly growth figures, which he said reflected gradual improvements in consumer confidence and industrial production as the supply of parts recovers. He said growing public works investment in reconstruction projects is also expected to provide further support for the economy.

"We expect the economy to achieve a relatively high growth in the second half of this fiscal year," Yosano told reporters.

Japanese stocks reacted favorably to the smaller-than-expected contraction of the economy in the quarter right after the disaster.

The Nikkei 225 benchmark index was 0.9 percent higher at 9,045.17 after the GDP announcement, which also sent other Asian stocks higher.

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