January Industrial Output Slides 2.0%

February 28, 2008
By Ken Worsley

Earlier today, the Ministry of Economy, Trade and Industry announced that Japan’s industrial production had fallen 2.0% in January, which was a larger decline than had been expected. In its report, METI asserted that production has essentially remained flat (it increased by 1.4% in December).

The worry now is that expected slowdowns in the US economy are causing Japanese manufacturers to take cautions against creating oversupply. Combined with weak domestic spending, and METI’s projection that output will fall a further 2.9% in February, this news sheds a pessimistic light on the direction of first quarter GDP figures. Bank of Japan Governor Toshihiko Fukui told reporters that the economic is slowing down after his meeting with the Council on Economic and Fiscal Policy today.

METI, however, expects to see a recovery in March, to the tune of a 2.8% rise. If the February and march projections are on target, the first quarter of 2008 will see the largest quarterly decline since 2001.

What interested us the most is that despite the media’s concentration on a potential slowdown in the US, METI actually reported strong falls in the shipments of electronic parts to Asia and Europe, while automotive exports to the Middle East slowed noticeably.

Nonetheless, focus remains on the US economy and what may happen there, even for METI.

While shipments fell 0.9% in January, inventories slid 1.3%.

Filed Under Business, Economic Reports, METI