— Japan Apr Industrial Output +1.0% M/M; Mar Record -15.5% M/M
— Japan Mar Industrial Output MNI Poll Median Forecast +2.2% M/M
— Japan Industrial Output Posts 1st M/M Rise In 2 Months
— METI Forecast Index: Japan May Output +8.0% M/M, June +7.7%
— METI: Japan Output Remains Low But Gradual Recovery Seen
— Japan Apr Industrial Output -14.0% Y/Y Vs Mar -13.1%

TOKYO (MNI) – Japan’s industrial output rebounded in April from the
worst-ever drop in the wake of the March 11 earthquake, as
manufacturers are trying to fix ravaged production facilities and supply
chain networks, government data showed Tuesday.

Production at the nation’s factories and mines rose a seasonally
adjusted 1.0% in April from the previous month, bringing the industrial
output index to 83.5, following -15.5% in March, which was the largest
drop on record, according to data from the Ministry of Economy, Trade
and Industry.

The April headline figure was weaker than most economists expected,
with the median forecast in a Market News International survey calling
for a 2.2% rise.

In addition, the seasonally adjusted monthly rise in April was well
below the 3.9% m/m gain predicted in the ministry’s forecast survey last
month.

METI’s latest survey of firms’ forecasts showed that overall
production is expected to rise 8.0% m/m in May — revised up from the
2.7% rise estimated in the previous survey — and will increase further
by 7.7% in June (first estimate).

If the outlook for May and June is realized, the June output index
will stand at 97.1, which would be the highest level since 97.9 seen in
February, a METI official told reporters.

But April-June output would still show a 2.2% drop from
January-March, posting the fourth consecutive q/q drop, he said.

The official said output in the quake-hit area rose 3.8% in April
from March while output in other regions rose 0.8%.

Based on the latest data and the outlook for the next two months,
METI more or less maintained its overall assessment, saying, “Industrial
production appears to be sluggish at low levels due to the Great East
Japan Earthquake but it is expected to recover gradually.”

In the previous month, the ministry said industrial output “dropped
sharply due to the Great East Japan Earthquake but it is expected to
recover gradually.”

In April, output of general machinery — steam turbine parts,
semiconductor-processing equipment and boiler parts — rose 12.8%
following a 14.5% drop in March.

Production of electronic parts and devices fell 12.7% in April,
with the pace of m/m drop accelerating from a 6.6% fall in March

By contrast, output of transportation equipment — mostly
automobiles — showed a slower m/m fall of 1.5% from March following a
46.7% drop in the previous month, which was the largest drop on record.

Output of mini vehicles with engine displacement of less than 660cc
rose 28.1% in April, while output dropped by 13.5% for large passenger
cars with engine displacement of over 2000cc and output for small
passenger cars with engine displacement of over 660cc but less than
2000cc fell 17.1%.

Nissan Motor Co now plans to manufacture around 98,000 vehicles in
Japan in June, nearly unchanged from the year-earlier level of around
100,000, according to a recent Nikkei report.

Toyota Motor Corp will also raise its production target for June to
90% of its normal level from the previously planned 70%, the report
said.

Japan’s 12 major automakers will likely see their plants operate at
80% of capacity on average that month.

As a result, total domestic auto output in fiscal 2011 is on course
to reach around 8 million units — only about 10%, or roughly 1 million
units, off from the 8.99 million units produced in fiscal 2010,
according to the report.

The near-term outlook for the nation’s production activity remains
bearish as the earthquake also poses major downside risks to exports.

The government said last week that Japan’s trade balance posted a
deficit of Y463.67 billion in April, the first red ink since January
this year, when Japan racked up a trade deficit of Y479.41 billion.

Compared with the year-earlier level, production in April fell
14.0% following a fall of 13.1% in March.

Other details from the latest data:

Shipments: April -2.7% m/m vs. March -14.6%, posting a second
straight m/m fall.

Inventories: April +0.5% vs. March -4.2%, marking the first m/m
rise in two months.

The inventory-to-shipments ratio: April +14.5% vs. March +4.1%,
showing in a second consecutive month of a m/m rise.

tokyo@marketnews.com
** Market News International Tokyo Newsroom: 81-3-5403-4835 **

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