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Quake Rocks Japan's July Production

Industrial production shrank 0.4 percent in July from previous month as a powerful earthquake dented auto production.

TOKYO (Kyodo) — Japan's industrial production shrank a seasonally adjusted 0.4 percent in July from the previous month as a powerful earthquake which hit Niigata Prefecture dented auto production, the industry ministry said Friday.
The index of output at mines and factories stood at 108.1 against the base of 100 for 2000, the Ministry of Economy, Trade and Industry said in a preliminary report.
The headline reading was higher than the average market forecast of a 0.6 percent fall. July production dipped following a 1.3 percent growth in June.
A METI official said the impact of the July 16 earthquake, which paralyzed automakers' production by halting the supply of auto parts, helped to drive overall output into negative territory in the reporting month.
''If the earthquake had not hit the region, industrial production would have posted a slight growth compared with the previous month,'' the official said.
Based on a rough estimate that the quake trimmed the nation's auto production by around 110,000 vehicles, the temblor is believed to have pushed overall output down by more than 1 percent, he said.
METI left its assessment on production unchanged from the previous month, saying it is on a leveling-off trend.
Looking ahead, METI said manufacturers forecast a robust 6.8 percent growth in production in August from July mainly because automakers are stepping up output following the quake-induced suspension.
However, manufacturers are also projecting a 2.5 percent output fall in September in a reaction to the expected surge in August.
Economists said a drop in production was within a range of expectation and overall output is likely to gain momentum, coupled with a recovery in the electronics parts and devices sector.
''Without the impact of the quake, Japan's production would have marked an increase,'' said Takehiro Sato, chief economist at Morgan Stanley Japan Ltd.
''We anticipate industrial production will post a rise of around 2 percent in the July-September period from the previous quarter'' Sato said.
According to the ministry, output by the transport machinery industry plunged 7.3 percent in July and that by chemical manufacturers fell 1.8 percent.
On the other hand, production by electronic parts and devices manufacturers posted a 4.7 percent rise on the back of firm demand of cellphones in emerging economies such as Brazil, Russia, India and China, the official said.
Output by information and communication electronics equipment makers gained 6.2 percent, spurred by robust domestic demand for personal computers and digital cameras.
The index of industrial shipments declined 1.2 percent to 111.3 for the first fall in four months and that of industrial inventories lost 0.3 percent to 95.6, down for the third month.
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