News Room - Business/Economics

Posted on 30 Mar 2009

Japan's industrial production falls for fifth straight month

Industrial production in Japan fell a sharp 9.4 percent in February, the government said Monday, as the sharp slump in global demand continued to paralyze the nation's factories.

 

The figure marks the fifth straight month of decline, with especially steep cutbacks among makers of transportation equipment and general machinery, according to the Ministry of Economy, Trade and Industry.

 

But February's data represent a slight improvement over January's record 10.2 percent plunge, suggesting that output may have already hit bottom.

 

The government predicts industrial production will rise 2.9 percent this month and climb 3.1 percent in April.

 

Japan, which had relied on foreign sales of its cars and gadgets to drive economic growth, now finds itself mired in its deepest recession since the end of World War II as consumers and companies around the world slash spending.

 

Data last week showed that exports tumbled by a record 49.4 percent in February.

 

The International Monetary Fund expects the Japanese economy, the world's second largest, to contract 5.8 percent for the 2009 calendar year, though many economists predict it could be far worse.

 

Compared with the same month last year, industrial production slumped 38.4 percent.

 

In response, major exporters including Toyota Motor Corp. and Sony Corp. have moved quickly to adjust by reducing shifts, suspending factory lines and announcing thousands of job cuts over the past few months.

 

Their moves may now be paying off as inventory levels come down.

 

Inventory dropped 4.2 percent in February in the second straight month of decline, the ministry said.

 

Manufacturers' shipments fell 6.8 percent.

 

Japanese exporters are beginning to see slivers of hope because of gains in the U.S. and China - their two biggest markets and the keys to an economic recovery.

 

In the U.S., home sales and demand for durable goods rose in February.

 

Wall Street has staged a strong rally over the last few weeks, lifted by optimism over a government plan to rid banks of souring debts.

 

Japanese stocks followed suit, with the benchmark Nikkei index up 20 percent since hitting a 26-year-low on March 10.

 

In China, overall economic growth slowed to 6.8 percent in the fourth quarter from 2007's stunning 13 percent rise.

 

But a 4 trillion yuan ($586 billion) stimulus planned by Beijing is expected to provide a boost to major companies with public works spending.

 

The country's central bank governor also said in a recent essay that the country's growth decline appears to be slowing.

 

Earlier report

 

Japan's government says industrial production in February fell 9.4 percent from the previous month as the sharp slump in global demand continued to paralyze the nation's factories.

 

The Ministry of Economy, Trade and Industry says the figure marks the fifth straight month of decline, with especially steep cutbacks among makers of transportation equipment and general machinery.

 

But the ministry said Monday it is a slight improvement over January's record 10.2 percent plunge, suggesting output may have already hit bottom.

 

The government predicts industrial production to rise 2.9 percent this month and climb 3.1 percent in April.