Japan: Industrial production contracts unexpectedly in February
March 30, 2012
In February, industrial production fell 1.2% over the previous month in seasonally adjusted terms, contrasting both the 1.9% expansion observed in January and the 1.3% rise expected by market analysts. On an annual basis, however, industrial production rose 1.5% in February, which contrasted the 1.3% drop registered in the previous month but undershot market expectations of a 3.7% increase. According to the Ministry of Economy, Trade and Industry, the monthly drop was broad-based as most of the main sub-components recorded lower readings compared to the previous month, particularly in the information and communication equipment category. Despite the monthly deterioration, the government maintained its assessment on Japan's industrial production, citing ?signs of an upward movement.? According to the Survey of Production Forecast, manufacturers are more upbeat and see industrial output expanding 2.6% in March, up from the 1.7% rise expected in the previous month's survey. A softer 0.7% increase is expected in April. As a result of the monthly figure, the trend continues to point downwards, with the annual average variation in industrial production inching down from minus 4.0% in January to minus 4.1% in February. At its 24 January monetary policy meeting, the Bank of Japan predicted GDP to have declined between 0.4% and 0.3% in the fiscal year 2011, which ended on 30 March. In the fiscal year 2012, the Bank sees GDP rebounding between 1.2% and 2.1%.