Japan's Industrial Output Slides In September

Production slipped 1.4 percent, but officials say production will keep expanding moderately led by car makers and electrical device manufacturers.

TOKYO (Kyodo) â€” Japanese industrial production decreased a bigger-than-expected seasonally adjusted 1.4 percent in September from the previous month, the industry ministry said Friday, but strong quarterly results helped it maintain a bright outlook.
 
The index of output at mines and factories stood at 110.3 against the base of 100 for 2000, the Ministry of Economy, Trade and Industry said in a preliminary report. Shrinking production of mobile phones and small vehicles weighed on the result.
 
The headline reading compared with the average market forecast of a 1.3 percent decline in a Kyodo News survey.
 
But on a July-to-September basis, the production index marked a 2.2 percent increase to 110.1, the highest since the government set the base year at 2000.
 
The ministry held its assessment of the overall trend of industrial production for the second straight month, saying it is ''rising moderately.''
 
Makers of information and communications electronics put in disappointing results in their output for September, down 10.5 percent.
 
The decline came from decreased cellphone production as most of Japan's handset manufacturers had completed their launches of new models by August, the ministry said.
 
Transport equipment makers, mainly carmakers, also saw declines, marking a 4.8 percent fall on decreasing production of minivehicles, which have an engine capacity of up to 660 cc and are manufactured for the domestic market.
 
The ministry said there are signs that carmakers have been shifting their priority to production of larger vehicles following their intense competition in launching new minivehicles in the past few years.
 
General machinery makers lost 6.2 percent in output on weakening demand for semiconductor manufacturing equipment, while electrical machinery manufacturers fell 2.6 percent due to a slide in production of lithium-ion batteries, the ministry said.
 
The index of industrial shipments fell 1.9 percent to 114.5 and that of industrial inventories gained 1.0 percent to 97.0.
 
Looking ahead, manufacturers forecast a 3.8 percent rise in industrial production in October and a 0.7 percent contraction in November, the ministry said.
 
The ministry said that despite some uncertain factors such as U.S. economic prospects, production will continue to expand moderately led by carmakers and electrical device manufacturers, the two main engines of Japanese exports. It also referred to the possibility of upward revision to the November forecast.
 
But analysts are more cautious.
 
''There is a view that the U.S. economy will further slow in the October-December period and that would affect the recovery momentum of Japanese manufacturers to some extent,'' said Hiroshi Shiraishi, Japan economist at Lehman Brothers. ''We should not be too optimistic.''
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