Business / Economy

Recovery in car exports to the U.S. in February helps Japan's industrial output rise 4.1%

Kyodo

Industrial production in February rose 4.1 percent, rebounding from a sharp fall the previous month due to a recovery in exports of cars to the United States, government data showed Friday.

The lower-than-expected increase in production follows a downwardly revised 6.8 percent drop in January, with the seasonally adjusted index of output at factories and mines standing at 103.4 against the base of 100 for 2010, the Ministry of Economy, Trade and Industry said in a preliminary report.

The ministry kept unchanged its basic assessment that industrial production is “picking up slowly” as the margin of rebound seen in February is “not enough,” a ministry official said.

“The recovery in car exports to the United States also spread to domestic demand for auto parts,” the official said.

“Strength in the general-purpose, production and business-oriented machinery sector is expected to push up overall production, in particular, industrial and construction robots,” he said. “Amid the shortage of labor, businesses are increasingly looking to the use of robots to make production efficient.”

The latest index for February means that the January-March quarter will likely mark the first decrease in eight quarters, analysts said.

Manufacturers polled by the ministry said they expect output to rise 0.9 percent in March and increase 5.2 percent in April.

Eleven out of 15 business sectors saw output rise, led by cars, auto parts and construction machinery, while a fall was observed in three sectors, including oil and coal product business. Production in the paper and pulp sectors remained flat.

“Output will continue to see upward momentum as many businesses are expanding investment in new equipment and research and development as a way to introduce new products and push up sales,” said Takuji Aida, chief economist at Societe Generale Securities.

At the same time, Aida cautioned that the “yen’s appreciation from the beginning of this year and concerns about a trade war could be a risk in dampening business sentiment.”

The imposition of tariffs of 25 percent on steel and 10 percent on aluminum by the U.S. has raised trade tensions with countries around the world, including China, which has already announced plans to raise tariffs on up to $3 billion of U.S. goods in retaliation.

The index of industrial shipments climbed 2.2 percent to 100.4 and that of inventories was up 0.9 percent to 109.9.