Business / Economy

Output ‘picking up’ for first time since ’95: METI

Kyodo

Industrial output rose 0.6 percent in November from the previous month on robust exports of chip-making devices, prompting the government on Thursday to declare for the first time in more than 20 years that production is recovering.

The seasonally adjusted index of output at factories and mines expanded for the second consecutive month — the first back-to-back rises this year — to 103.6 against the base of 100 for 2010, the Ministry of Economy, Trade and Industry said in a preliminary report. It rose 0.5 percent in November.

Production “is picking up,” the ministry said, upgrading its assessment. The previous phrase used to say industrial output “shows picking up movement.” It previously said industrial output “shows picking up movement.”

The wording in the latest assessment is the strongest in about 22 years, according to METI.

In explaining the upgrade, a METI official said recent output levels “have shown strong momentum. The demand for investments by businesses is also solid.”

In the reporting month, production of semiconductor-manufacturing equipment advanced notably, leading growth of 3.1 percent in the sector for general purpose, production and business-oriented machinery.

Electronic parts and device makers also added to the momentum, up 4.3 percent, while petroleum and coal products makers logged a 6.1 percent gain.

Overall, 10 out of 15 business sectors saw production rise.

Exports of chip-making devices to South Korea and Taiwan have been strong but those to the United States and Europe also grew particularly in November, the official said, adding growth was also seen in output of semiconductors used in cars and smartphones.

Manufacturers polled by the ministry said they expect output to rise 3.4 percent in December but fall 4.5 percent in January.

Yoshimasa Maruyama, chief market economist at SMBC Nikko Securities Inc., acknowledged that industrial production is on an upward trend, backed by a recovery in the world economy, but also cautioned against “excessive” expectations going forward.

“Given the relatively high increase in production in the October-December quarter, the level for the January-March quarter is expected to fall. Looking ahead, we should not be excessively confident about the output index,” Maruyama said, noting that production in the semiconductor industry may not show continuous growth in the short-term.

The index of industrial shipments grew 2.4 percent to 101.3 and that of inventories was down 1.0 percent to 109.6.