Japan’s factory production fell for the first time in six months last month as the export-reliant country grappled with a strong yen and global economic turmoil.
The government said yesterday that factory output fell 4 percent from the previous month as manufacturers produced fewer cars, chip-related machines and cellphones. The result was worse than market expectations for a mild decline.
The Ministry of Economy, Trade and Industry described industrial production as “flat,” suggesting that Japan’s recovery from the March 11 earthquake and tsunami is tapering off in the face of new economic worries.
A strong yen is battering exporters, whose overseas earnings shrink in value as the Japanese currency climbs. Some companies are shifting production abroad as a result, and officials worry openly about a hollowing out of Japanese industry.
The US dollar hit a record low against the Japanese currency for a third straight day in New York, dropping to ￥75.63 at one point. That prompted Japanese Finance Minister Jun Azumi to warn of possible foreign exchange intervention by the government.
He reiterated his belief that speculators are behind the yen’s rise and said currency levels should “reflect the real economy.”
“We will closely watch the Tokyo market,” Azumi told reporters in Tokyo, according to Kyodo News agency.
Officials will “take decisive action when it proves necessary” to combat speculators, he added.
The government projects industrial production to rebound in the fourth quarter. The government’s survey points to an output expansion of 2.3 percent this month and 1.8 percent next month.
However, those improvements may not materialize as expected because of the heavy flooding in Thailand, where many Japanese manufacturers have factories. Toyota Motor Corp, Sony Corp and others face significant supply chain disruptions that are undermining production in Japan and elsewhere.
Separately, the government says the unemployment rate dropped to 4.1 percent in last month from 4.3 percent in August. The survey was the first one since the disaster to include the tsunami-devastated prefectures of Miyagi, Iwate and Fukushima.
The figure, however, does not necessarily mean more people are working.
“Despite improvements in some areas,” said Kyohei Morita, chief economist at Barclays Capital in Tokyo, in a note to clients, the lower jobless rate was “less because unemployed people found jobs and more because they stopped looking for work.”
The government also released monthly data on household spending, income and consumer prices that underscore the economy’s impact on families.
Average monthly household spending in September fell a real 1.9 percent from the previous year to ￥270,010 (US$3,555). The figure is a key barometer of private consumption, which accounts for more than half of Japan’s gross domestic product.
Monthly household income declined 0.7 percent to ￥422,720, according to the Ministry of Internal Affairs and Communications.
Last month’s core consumer price index, which excludes volatile fresh foods, rose 0.2 percent from a year earlier on higher fuel costs. Preliminary CPI for the Tokyo area — considered an indicator of broader price trends for the country — fell 0.4 percent this month.