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1st LD Writethru: Japan's industrial output drops 1.4 pct. on month in December

Xinhua, January 29, 2016 Adjust font size:

Japan's industrial output dropped a seasonally adjusted 1.4 percent in December 2015 from the previous month, marking the second consecutive month of decline, government data showed Friday.

The index of output at factories and mines stood at 96.5 against the base of 100 in 2010, with the 1.4 percent drop far greater than expectations for a 0.3 percent retreat amid a slowdown in overseas economies falling demand for Japan's exports, the Ministry of Economy, Trade and Industry said in a preliminary report.

The government had maintained factory output would rise 0.9 percent in the recording period, with their projection a result of consultations with manufacturers in December. Nevertheless, the government maintained its basis assessment of the nation's industrial production with the previous month, stating that production "fluctuates indecisively."

Industries that mainly contributed to the decrease were general-purpose, production and business oriented machinery, electronic parts and devices and transport equipment, in that order, the ministry said on Friday.

On an annual basis, the government data showed that for 2015 the industrial output index retreated 0.8 percent from the previous year to 98.2, compared to an increase of 2.1 percent in 2014.

The index of industrial shipments, meanwhile, slumped 1.7 percent to 94.8. Inventories, however, edged up 0.4 percent at 112.3, in the recording month, the government said.

Manufactures said following the latest hearings that they believe output will surge 7.6 percent in January, but retreat, thereafter, by 4.1 percent in February, reflecting the government's latest assessment that factory output is fluctuating without clear direction.

Local analysts said that manufacturers remain under pressure to limit spending amid a gloomy economic outlook, compounded by a slowdown in some emerging economies and falling demand for Japan-made goods. This is against an ongoing backdrop of volatility in prices for crude oil, with rates oscillating almost daily and unsettling global stock markets.

"Japanese manufacturers will probably hold off spending as the global financial markets have been roiled and Japanese stocks slumped," Hiroaki Muto, chief economist at Tokai Tokyo Research Center, was quoted as saying Friday.

"The prospects for exports and production are looking cloudy, meaning the economic momentum will probably weaken in the January-March period," he said. Enditem