Breaking News

Plans to tear down old Cole County jail and sheriff's house move forward April 16, 2014

Japan factory output rises but outlook weak

TOKYO (AP) — Japan’s factory production rose for the first time in two months as auto and machinery makers expanded output while bracing for global headwinds.

Factory production in October rose 2.4 percent from the previous month, the government said Wednesday. In September, it slumped 3.3 percent.

Autos, general machinery and chemicals drove the latest increase, according to the Ministry of Economy, Trade and Industry’s preliminary report.

It described industrial production as “flat” and expects another dip this month. It estimates a 0.1 percent decline in November and a 2.7 percent rise in December.

Masamichi Adachi, senior economist at JPMorgan Securities Japan, said the government’s forecasts for the last two months of the year are “too optimistic” given rising inventories.

A strong yen and a weak global economy has been challenging for Japan’s exporters. Along with the debt turmoil in Europe, the recent flooding in Thailand that has disrupted auto production has compounded worries.

A deputy governor of Japan’s central bank underscored those concerns in a speech Wednesday in Kyoto, western Japan. Europe’s sovereign debt problems represent the biggest concern for the global economy and could lead to lackluster growth around the world, Kiyohiko Nishimura said.

The yen has strengthened as a result, with global investors flocking to the Japanese currency as a safe haven. The yen has hit multiple historic highs against the dollar this year, forcing major manufacturers like Panasonic Corp. and Nissan Motor Co. to shift some production out of Japan.

A strong yen shrinks the value of overseas profits when repatriated and makes Japanese products more expensive in overseas markets.

Should the yen continue to appreciate, companies may move a critical mass of production overseas and Japanese manufacturing would find it hard to recover even if the yen depreciated in future, he said, according to a copy of the speech released by the Bank of Japan.

Barclays Capital expects growth in industrial production to slow through the first quarter of 2012. But its chief economist in Japan, Kyohei Morita, does not believe that will lead to recession for the world’s No. 3 economy.

Starting the second quarter, domestic demand will fuel growth as reconstruction after the March 11 earthquake and tsunami gains momentum, Morita said in a research note.

Shipments rose 0.6 percent from September, and inventories climbed 0.8 percent.

Comments

Use the comment form below to begin a discussion about this content.

Please review our Policies and Procedures before registering or commenting

News Tribune - comments