Disappointing output data back BOJ action


Industrial production rose less than predicted in March, underscoring forecasts that economic growth will slow later this year and reinforcing the central bank’s case for stepping up monetary stimulus.

Output gained 1 percent from February, compared with the 2.3 percent median forecast in a Bloomberg News survey of economists, a trade ministry report showed Friday.

A separate release showed consumer prices rose 0.2 percent from the year before, exceeding estimates. The Bank of Japan’s goal for inflation is sustained 1 percent gains.

The world’s third-largest economy rebounded last quarter after shrinking in 2011 with the impact from the March megaquake, tsunami and nuclear crisis, and is forecast to moderate as a bump from reconstruction diminishes.

“Japan’s economy is on a recovery path but the production data suggest it’s not that strong a pickup,” said Akiyoshi Takumori, chief economist at Sumitomo Mitsui Asset Management Co.

Friday’s output report also showed that manufacturers forecast a month-on-month rise in production of 1 percent in April and a 4.1 percent fall in May. Takuji Okubo, chief Japan economist at Societe Generale SA in Tokyo, said the May outlook was “devastating.”

“It seems as if manufacturers have given up trying to go back to prequake production levels,” Okubo said. “Because of the yen and weak demand overseas, they don’t think exports are going to expand.”

Last month’s advance in consumer prices was propelled by higher energy costs, with household goods damping the gain, Friday’s statistics bureau report showed. Shutdowns of dozens of nuclear reactors since the calamity have deepened the nation’s reliance on imported fuel, boosting energy costs.

Retail sales also missed analysts’ forecasts Friday, with purchases down 1.2 percent in March from the previous month, compared with the median estimate for a 0.5 percent drop. A separate report showed that the unemployment rate held at 4.5 percent last month.