Japanese industrial output
rose 4.6 percent in August, the biggest monthly increase in 42
years, led by Toyota Motor Corp. and other auto markers, amid
demand for their new model cars.
Still, manufacturers expect to slow production this month
and next amid concern the stronger yen will crimp export sales,
the Ministry of International Trade and Industry said.
The rise in industrial production last month, the biggest
since May 1957, and above economists' expectations of a 3.8
percent gain, is the latest in a string of indicators to show
the recovery from last year's recession is taking hold.
``Now that industrial production is up this much, following
the last gross domestic product report, we can say the economy
has gone into a full-scale recovery,' Kazuhiko Ogata, economist
at ABN Amro Securities (Japan) Ltd. said.
Carmakers led the increase in output. Production at Japan's
11 automakers rose 5.9 percent in August from a year earlier, as
Mazda rolled out its new MPV minivan and Premacy wagon and Toyota
unveiled its new Platz sedan and FunCargo, as well as the latest
model luxury Crown sedan and Celica sports coupe.
``We have several new models that are selling well,' said
Megumu Tanefusa, spokesman at Nissan Motor Co., Japan's second-
biggest automaker. Nissan recently released its latest Cedric and
Gloria luxury sedans, Serena compact and Wingroad van.
Government officials welcomed the increase. ``It sounds
great,' Taichi Sakaiya, head of the Economic Planning Agency,
told reporters after the Cabinet meeting.
Changed Outlook
``It was a relatively big hike from the previous month,'
said Konosuke Ikeya, director at the research and statistics
bureau at MITI. ``We have thus changed our perception this month
so that production and shipments are starting to show signs of
improvement.'
Steelmakers and industrial machinery manufacturers helped
pace the increase in production, MITI said.
Even given the expected decline this month, output is on
course to rise at a seasonally adjusted 15.9 percent annual pace
in the third quarter, said James Malcolm, an economist at J.P.
Morgan Securities Asia Ltd. That would be the biggest quarterly
gain since the second quarter of 1976, ``and argues for a strong
GDP figure for the third quarter.'
Rather than piling up in warehouses, the extra goods were
sold -- another sign demand is rising. Shipments rose 4 percent
in August from July, and the inventory ratio, which indicates
manufacturers are ready to start boosting production when it
reaches 100, dropped to 99.4 from 101.7.
``The huge drop in the inventory ratio means the recovery in
output will continue,' said Ron Bevacqua, senior economist at
Commerz Securities (Japan) Co.
Consumer demand is rising -- spending rose 0.8 percent in
the April-June quarter, the second consecutive rise -- even as
incomes decline. People are digging into their savings to spend,
and analysts say there won't be a sustained increase in spending
until wages start to rise.
Slow Down
Still, manufacturers expect to slow production lines after
revving them up last month. Output is seen falling 1.3 percent
this month, and declining another 0.7 percent next month, MITI
said.
``Future growth can't remain strong,' said Hiroshi
Kuribayashi, economist at Barclay's Capital Japan Ltd. ``There's
a question to whether demand can keep up with the increase in
production.'
The expected decline in output this month and next helped
push stocks down. The benchmark Nikkei 225 average fell 43.42, or
0.3 percent, to 17,282.28. Bonds rose, and the yen fell.
MITI is concerned that if the yen continues to rise, it will
pare exporters' profits, prompting them to scale back production.
The yen has risen about 13 percent the past six months, making
Japanese goods more expensive in overseas markets.
``What's pushing overall production now is exports. If the
yen rises, then we'll be worried,' said MITI's Ikeya. |
