March production logs 1st rise in 6 month, further growth eyed

TOKYO, April 30 Kyodo -
Japan's industrial production rose in March, up 1.6 percent from the previous
month for the first growth in six months on recovery in output in such
industries as auto and high-tech, while manufacturers project further growth in
upcoming months, the government said Thursday.
The index of output at mines and factories stood at 70.6, against the base of
100 for 2005, up from 69.5 in February, the lowest ever, the Ministry of
Economy, Trade and Industry said in a preliminary report. Continued progress on
inventory cuts in various sectors added to the upward momentum.
The headline reading was well above the average market forecast of a 0.9
percent increase in a Kyodo News survey.
The ministry slightly upgraded its basic assessment, saying production by
Japanese manufacturers is ''sluggish,'' employing a milder expression than
''rapidly declining'' used between November and February.
The ministry remains cautious, however, with one of its officials suggesting
the latest recovery is just a rebound from continued sluggishness over past
months.
''We need to closely watch whether the upward trend will take root'' before the
government becomes optimistic, Vice Minister of Economy, Trade and Industry
Harufumi Mochizuki told reporters.
METI also released data for fiscal 2008 which showed that the production index
plunged a record 12.7 percent in the 12 months through March from the previous
year to 94.4, its lowest level under the current base year. It was the first
fall in seven years, due largely to slowing Japanese exports amid the global
economic turmoil.
But analysts put more focus on brighter aspects.
Production apparently ''hit bottom in the short term and is expected to record
stronger readings,'' said Hiromichi Shirakawa, chief economist at Credit Suisse
in Japan, who added that double-digit growth may be possible in May and June.
Looking ahead, METI said output from manufacturers is expected to rise 4.3
percent in April -- upgraded from an earlier estimated 3.1 percent -- and
advance 6.1 percent in May.
''If production recovers as a global trend, it would stimulate demand (for
Japan's manufactured goods) from outside,'' Shirakawa said, stressing the
likelihood that the country's manufacturers, especially the electronic parts
industry, will see a recovery in exports.
By industry, output by electronic parts and device manufacturers grew 10.3
percent month-on-month in March, as production of semiconductor integrated
circuits for game consoles, mobile phones and capacitors for personal computers
expanded.
Machinery makers also led the advance. Meanwhile, the transport equipment
industry, including carmakers, gained 2.3 percent as output of passenger
vehicles for export to Asia and Europe was robust, it said.
The index of industrial inventories was down 3.3 percent to 100.1 for the third
consecutive month of decline.
Inventories of cars, trucks and other transport equipment dropped 18.5 percent,
while those of information and communications devices, such as televisions and
digital cameras, shed 14.6 percent. Cuts in inventories usually give companies
room for boosting production.
The index of shipments gained 1.4 percent to 73.0 for the first increase in six
months.
==Kyodo