Japan’s industrial production fell for the fifth straight month last month but looks poised for a rebound as the country’s factories begin to stir.
Output retreated 9.4 percent from a month earlier, with especially steep cutbacks among makers of motor vehicles and general machinery, the government said yesterday. The figure was in line with market expectations and follows January’s record 10.2 percent plunge.
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 the gloom nearly halved exports last month.
The IMF expects the Japanese economy to contract 5.8 percent for this calendar year, though many economists predict it could be far worse. Sentiment in the Bank of Japan’s closely watched “Tankan” business survey is expected to hit its lowest point ever tomorrow.
Compared with the same month last year, industrial production slumped 38.4 percent.
The storm, however, may finally be losing some of its fury. The Ministry of Economy, Trade and Industry (MITI) predicts industrial production will rise 2.9 percent this month and climb 3.1 percent next month.
In response to the unprecedented collapse in global demand, major exporters including Toyota Motor Corp and Sony Corp have moved quickly to adjust. They have reduced shifts, suspended factory lines and announced thousands of job cuts over the past few months.
Their aggressive moves have suppressed inventory levels, which dropped 4.2 percent last month in the second straight month of decline, the ministry said. Manufacturers’ shipments fell 6.8 percent.
“The auto industry is leading the way in reducing cutbacks as inventories fall below optimum level due to high-speed inventory corrections,” Goldman Sachs economist Chiwoong Lee said in Tokyo.
“Production should stabilize at low levels and might even post a small increase for April-June,” Lee said.
Nissan Motor said last month that its inventory levels have dropped low enough to ease domestic production cuts ithis month, although spokeswoman Pauline Kee declined to provide specific goals.
Along with slimmer stockpiles, Japanese exporters are also beginning to see slivers of hope in the US and China — their two biggest markets and the keys to an economic recovery.
US home sales and demand for durable goods rose last month, while Wall Street has staged a strong rally over the last few weeks on optimism over a government plan to rid banks of souring debts.
In China, overall economic growth slowed to 6.8 percent in the fourth quarter from 2007’s stunning 13 percent rise. A 4 trillion yuan (US$586 billion) stimulus planned by Beijing is expected to provide a boost to major companies with public works spending.
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