Industrial production fell a seasonally adjusted 9.4 percent in February, the government said Monday.
It was the fifth straight month that output fell — the longest slump since 2001 — as global demand for automobiles and high-tech products continued to erode. However, there are signs that production may pick up in the coming months in parallel with recent sharp cuts in inventories.
The index of inventories dropped a record 4.2 percent, the Ministry of Economy, Trade and Industry said in a preliminary report.
Inventories of small cars plunged 33.8 percent, contracting for the first time in six months, and those of liquid crystal display televisions dropped for the third straight month, down 25.9 percent.
Looking ahead, METI said output from manufacturers is expected to rise 2.9 percent in March and expand 3.1 percent in April.
It is the first time since January 2008 that METI has projected increases in manufacturer production for the upcoming two months.
Strong production growth is projected in factories for transport equipment, electrical machinery, chemical products, and electronic parts and devices.
The transport equipment sector’s output is expected to rise 4.5 percent in March and 7.0 percent in April.
But METI officials were still cautious about painting a bright picture for the economy’s prospects.
“The global economy is fraught with uncertainty,” one official said. “We cannot say that our country’s production has bottomed out.”
METI said output at manufacturers is “rapidly declining,” using the same expression in its overall assessment for the fourth straight month.
Norio Miyagawa, an economist at Shinko Research Institute, said output may have finally touched bottom, predicting it will seesaw between positive and negative territory from month to month for a while.
“Still, it needs to be watched carefully when there will be a real rise in production that will come from a recovery in demand, not owing to drastic inventory cutbacks” Miyagawa said.
In January, industrial production declined at a record pace for the third straight month on the back of slumping exports in the wake of the economic crisis.
The February output reading compares with a fall of 9.1 percent projected on average by economists surveyed by Kyodo News.
The index of output at mines and factories stood at 68.7 against the base of 100 for 2005 and that of inventories came to 103.7.
A 23.2 percent dive in output in the transport equipment sector, including cars and trucks, dealt the heaviest blow to the overall production retreat, the officials said.
All industrial sectors subject to METI’s analysis, except oil and coal products, slashed their output, with general machinery down 15.2 percent from the previous month.
The index of shipments fell 6.8 percent to 70.9., shrinking for the fifth consecutive month.
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