Business

Friday July 31, 2009

Japan output up for 4th straight month


TOKYO: Japan’s industrial output rose in June for the fourth month running and manufacturers forecast more gains to come, suggesting that stimulus spending at home and abroad will prop up demand for cars and consumer electronics.

While output was still 23% below year-ago levels, an 8.3% quarterly rise in April-June was a record high, underlining expectations Japan emerged from recession in the second quarter, and manufacturers forecast further gains in the third quarter.

Combined with an inventory index reaching its lowest level in June since it was re-based in 2005, analysts said the data suggested companies were producing more than is needed solely to replenish inventories as global stimulus efforts had an impact.

“Industrial output will likely continue to pick up in the July-September quarter on progress in inventory adjustments, an increase in exports and economic stimulus measures taken overseas such as in China,” said Yoshiki Shinke, senior economist at Dai-Ichi Life Research Institute.

A shopper looks at flat panel TVs at an electronics shop in Tokyo. Stimulus spending at home and abroad is expected to prop up demand for Japan’s cars and consumer electronics — AP

The 2.4% increase in June was in line with forecasts but was smaller than gains of nearly 6% in April and May, when companies replenished stocks after cutting inventories aggressively during the global financial crisis.

Still, the Ministry of Economy, Trade and Industry, which released the data, remained cautious. It said production was picking up but output was still lower than before the collapse of Lehman Brothers, which triggered the global economic downturn.

Rises in output of flat-screen TVs and automobiles suggested stimulus efforts were having an effect on demand, but worsening job conditions and weak capital spending meant the outlook was highly uncertain, a ministry official told a briefing.

Reflecting the effect of stimulus measures, manufacturers surveyed by the ministry expected output to rise 1.6% in July and 3.3% in August. That would mean output would rise 7.4% in the third quarter even if there is no growth in September. — Reuters


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