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Japan shows signs of slowdown

A large tanker is loaded in Tokyo Harbor yesterday. According to the government, Japan's industrial production fell to the lowest level in seven months in October, weighed down by slower exports and global inventory adjustments in the information technology sector. PHOTO: EPA

Japan's economy showed fresh signs of slowing yesterday, with an unwelcome and unexpected deterioration in both industrial output and unemployment figures for October, raising concerns over the outlook.

Industrial output fell 1.6 percent from September due to a slump in electronics, such as mobile phones and personal computers, marking the sharpest decline since February, when output fell 3.8 percent, the trade ministry said.

The October figure was far worse than the average market forecast for a 0.2 percent increase but the ministry insisted the overall trend in Japan's industrial output was flat, rather than falling.

"Although the electronic parts and devices industry is facing an adjustment period, there are other sectors that enjoy robust business conditions, namely the steel industry," an official from the ministry said.

Steel production did rise 2.4 percent from September but passenger and small passenger cars declined 3.1 percent and 7.0 percent, respectively.

"Although overseas demand for cars remained steady, domestic demand was weak, pulling down overall auto output," said Shinichiro Kobayashi, senior economist at UFJ Institute.

Kobayashi said last month's deadly earthquake in the central region of Niigata and typhoons that hit western provinces would have dampened the figures.

In the key electronics sector, mobile phone output dropped 28.6 percent, with personal computers down 25.2 percent and color televisions down 18.6 percent, although hot-selling digital cameras rose 19.1 percent.

"The fall in production of electronic products clearly reflected sluggish global demand for IT-related products," said Tatsuya Torikoshi, senior economist at Daiwa Institute of Research.

In October, shipments fell 1.6 percent from September, with inventories down 0.7 percent, the trade ministry said, forecasting that industrial output would rise 3.7 percent last month but then drop 2.2 percent this month.

Meanwhile, the Ministry of Internal Affairs and Communications said the jobless rate in October rose to 4.7 percent from 4.6 percent in September, when it had improved from 4.8 percent. Consensus forecasts had been for no change.

"The rise in the unemployment rate among female workers might have had something to do with a series of devastating typhoons, which affected such industries as wholesale, retail and services," a ministry official said.

"Otherwise, today's data clearly confirm the continued improvement of labor market conditions due to easing restructuring pressure," he added.

In October, the male unemployment rate remained at 4.8 percent, while the female jobless rate rose to 4.5 percent from 4.2 percent in September.
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