Industrial production dropped a seasonally adjusted 0.1 percent in May from the previous month for the first fall in three months on decreasing automobile exports to the United States and Asia, the government said Tuesday.
While the headline reading undershot the average market forecast of staying flat in a survey of analysts, the Ministry of Economy, Trade and Industry said in a preliminary report that it projects industrial output to grow both in June and July.
The index of output at factories and mines stood at 95.9 against the base of 100 for 2005. The index of industrial shipments fell 1.7 percent to 96.4 and that of industrial inventories was up 2.0 percent to 96.5.
By sector, output by transport equipment makers dropped 2.7 percent partly because of a decrease in production of cars for North America, Australia and Asia, and output by pulp and paper makers weakened 1.8 percent.
Meanwhile, output of information and communications equipment increased 5.5 percent as makers produced new models of liquid crystal televisions, mobile phones and laptop computers, a METI official said.
On production, the ministry left its basic assessment unchanged for the 14th consecutive month, saying, "Industrial production continues to show upward movement."
"We kept the assessment because a survey shows that a plus growth will continue, even though (June's) figure fell slightly to negative territory," the official said.
Manufacturers polled by METI anticipate output will chalk up growth of 0.4 percent in June and 1.0 percent in July.
Yoshiki Shinke, senior economist at Dai-ichi Life Research Institute, said growth, although it may be in a narrow range, is likely to continue, but warned about the prospects of domestic demand for automobiles.