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Industrial production rose less than expected in July, signaling that the recovery from the March 11 earthquake and tsunami is losing momentum as the yen gains and overseas demand slows.

Factory output increased 0.6 percent in July from June, the slowest gain since March, the Ministry of Economy, Trade and Industry said Wednesday. The median estimate of 28 economists was for a 1.4 percent gain after a 3.8 percent increase in June.

Prime Minister-elect Yoshihiko Noda faces pressure to reverse three straight quarters of economic contraction just as Europe’s debt crisis and elevated U.S. unemployment undermine global confidence and demand.

The yen’s advance to a postwar high against the dollar in August is also threatening the earnings of exporters such as Honda Motor Co. and Denso Corp.

“The report points to growing concern over the outlook for the economy as the overseas economy is slowing and the yen is staying at a historically high level,” said Shuichi Obata, senior economist at Nomura Securities Co., adding “There’s a high chance that the pace of Japan’s recovery will slow in the fourth quarter.”

A stronger yen makes Japanese products less competitive abroad and erodes overseas profits when they’re repatriated.

Government reports this month show that exports fell more than expected in July, the jobless rate rose for a second month and retail sales dropped, signaling the economy is struggling to recover.

Manufacturers said they plan to increase output 2.8 percent in August and decrease production 2.4 percent in September, according to a survey included in the METI report.

Output of electronic parts and devices fell 3.4 percent last month from June, the sharpest decline in three months.

Honda Motor Co. said Aug. 9 it may revise its full-year profit forecast when it announces first-half earnings in October, depending on how long the market’s turmoil lasts.

The government last week unveiled a $100 billion program to aid exporters and spur overseas purchases as the yen’s more than 6 percent advance against the dollar in three months threatens exporters’ sales and profits.

Foreigner spending slips

KYODO

Money spent by foreign visitors in the April-June quarter plummeted 46.9 percent from a year earlier to an estimated ¥120.8 billion, as the number of travelers halved amid the disaster at the Fukushima No. 1 nuclear plant, data released Wednesday by the Japan Tourism Agency showed.

The amount spent per person averaged ¥111,128, compared with ¥104,003 in the same period during the previous year and ¥113,187 in the preceding quarter, according to the agency.

Visitors from China spent the highest total sum, of ¥29.9 billion, followed by those from South Korean at ¥16.8 billion and Taiwan at ¥16.7 billion.

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