Japan’s factory output slid 4% in September

Monday, 31 October 2011 00:00 - - {{hitsCtrl.values.hits}}

TOKYO: Japan’s industrial production fell more than analysts expected, an indication that the recovery from the March earthquake may be stalling due to a yen at a postwar high and a global slowdown.

Factory output slid 4% in September from the previous month, the trade ministry said in a report in Tokyo, the first decline since the disaster. That was lower than all 28 forecasts of economists surveyed by Bloomberg News, who were predicting a median drop of 2.1%.

Companies may continue to reduce output as the worst flooding in Thailand in more than 50 years curbs part supplies and a slowing U.S. economy and Europe’s fiscal crisis damps world demand. Manufacturers including Nintendo Co. are also contending with a yen near a post World-War II high against the dollar that is crimping their earnings.

“Demand hasn’t grown as much as producers had expected,” said Yoshiki Shinke, a senior economist at Dai-Ichi Life Research Institute in Tokyo. “They’re also revising down their forecasts. It’s worrying and an indication that the economy is weakening.”

Nintendo, the world’s largest maker of video-game machines, yesterday forecast its first annual loss in at least 30 years after the yen reached a postwar high and its new 3DS console had weaker-than-expected sales.

The jobless rate unexpectedly fell to 4.1% in a report that was affected by the inclusion of labor statistics from earthquake-stricken areas for the first time since the disaster.

Economists had forecast an unemployment rate of 4.5%. Household spending fell 1.9% in September from the same month a year earlier, while consumer prices excluding fresh food rose 0.2% from a year earlier, separate reports showed.

“If production grows, we’ll start to see more jobs, but output isn’t doing great and companies aren’t confident about the sustainability of the recovery,” said Dai-Ichi Life’s Shinke.

“There’s a risk that the already slow job market improvements will stop as a result, so it’s better not to be upbeat about the outlook for employment.”

The government estimates its third reconstruction package will create around 600,000 jobs and bolster gross domestic product by 1.7%, according to a report released by the Cabinet Office on Friday. (Bloomberg)