Japan’s industrial output rose less than expected in July, deepening concerns that a rebound from the March 11 earthquake and tsunami is easing as the yen remains strong and global demand slows.
In the fourth straight monthly gain, industrial production rose 0.6 percent in July, but missed expectations of a 1.5 percent increase. Production rose by a revised 3.8 percent in June.
The report comes amid fears that the US economy is slipping and growth in Europe could be affected by the eurozone debt crisis, clouding the outlook for Japan’s exporters.
The slowing rebound illustrates the urgency with which new Japanese Prime Minister Yoshihiko Noda must move to navigate the economy out of three straight quarters of contraction as external risks increase, analysts said.
“The impact of a global economic slowdown, coupled with the yen’s rise, is believed to be putting the brake on a key recovery in exports and curbing a recovery in manufacturing activity,” said Naoki Murakami, chief economist at Monex brokerage.
“Japanese companies expected a V-shaped recovery in the second half of fiscal 2011, but judging from current activity it could be difficult,” he added.
Producers polled by the government said production in the world’s third-largest economy was expected to increase by 2.8 percent last month, but decrease by 2.4 percent this month.
Last week, Japan announced a package including a US$100 billion measure to help companies grapple with the strength of the yen, after the currency soared to fresh post-World War II highs against the US dollar.
It was ￥76.61 against the greenback yesterday, after hitting a postwar high of ￥75.95 earlier this month.
While the auto sector has mobilized to overcome production slowdowns in the wake of the earthquake and tsunami, the prospects for Japan’s electronics firms are clouded, said Hideki Matsumura, an analyst at Japan Research Institute.
“The auto sector is expected to recover steadily in the second half due to domestic demand, but prospects for electronics firms are not so clear due to negative factors, including a strong yen and concerns about the global economy,” he said.
However, he added: “We think this slowdown indicates production has entered into a minor adjustment period before full recovery.”
South Korea said yesterday its industrial output grew in July at the slowest pace for 10 months.
Statistics Korea said production in mining and manufacturing expanded 3.8 percent compared with the previous year, the slowest rate since September last year when it rose 2.9 percent.
It was the 25th straight month of expansion, but the figure fell sharply from June’s revised 6.5 percent growth. Output declined 0.4 percent month-on-month.
“The on-month contraction seems to have been partly caused by a slump in the construction sector,” said Yoon Jong-won, director general of the finance ministry’s economic policy bureau. “The July numbers provide a somewhat mixed picture, with some improving and some others worsening. Uncertainty seems to be mounting.”
Production of vehicles rose 12 percent year-on-year thanks to higher demand from home and abroad, while semiconductors and their components saw a 8.4 percent rise, but construction projects completed in July dropped 13.2 percent from a year earlier.
South Korea’s export-dominated economy faces heightened uncertainty amid the eurozone debt crisis and the economic slowdown in the US.
“Although economic downside risks are expanding from the global fiscal crisis, [our economy] will continue its steady recovery given the current export and domestic demand conditions,” South Korean Finance Minister Bahk Jae-wan told an economic policy coordination meeting.
Bahk said the July output figure is attributable to one-off factors such as summer vacations, heavy rain and smaller government spending on infrastructure.
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