TOKYO (MNI) – The Bank of Japan on Monday slightly revised down its
overall assessment to say the economic recovery appears to be “pausing”
in its monthly report for November, downgrading is view for the second
straight month.

“Japan’s economy still shows signs of a moderate recovery, but the
recovery seems to be pausing,” the BOJ said in today’s report.

In October, the BOJ revised down its assessment for the first time
since January 2009, saying “Japan’s economy still shows signs of a
moderate recovery, but the pace of recovery is slowing down.”

Last month the government revised down its overall assessment of
the economy for the first time in 20 months since February 2009, saying
it is “pausing” after recent improvement as slower global growth is
denting demand for electronics exported via Asian countries.

This month, the BOJ turned slightly more cautious about the
outlook, saying, “Japan’s economy is likely to grow at a slower pace for
some time, but is expected to return to a moderate recovery path
thereafter.”

In October, it said, “Japan’s economy is likely to recover at a
moderate pace after a temporary slowdown.”

“Exports and production have recently been more or less flat,” the
BOJ said in the November report.

As for its outlook, the BOJ said, “Exports are likely to be more or
less flat for the time being, but they are expected to increase
moderately again, reflecting the improvement in overseas economic
conditions.”

In October, the BOJ said, “Growth in exports and production has
recently been decelerating.”

Japanese industrial production fell for the fourth month in a row
in September, down 1.9% m/m, as declines in output of passenger cars and
semiconductors, among other items, more than offset gains in production
of cellular phones and liquid crystal TVs.

The September drop followed declines of 0.5% in August, 0.2% in
July and 1.1% in June, showing output has been hit hard by the recent
appreciation of the yen, the end of the government’s subsidy for buying
fuel-efficient vehicles in early September, and continued subdued
overseas demand.

METI’s survey of firms’ forecasts showed that production will slump
by 3.6% m/m in October — revised down from the 2.9% fall estimated in
last month’s survey — before rebounding 1.7% in November (first
estimate).

July-September industrial production fell 1.9% from the previous
quarter after +1.5% in April-June, marking the first q/q drop in six
quarters since -20.0% in Q1 of 2009. It was down sharply from +7.0% in
January-March 2010 and +5.9% in the final quarter of 2009.

Output in the October-December quarter is now estimated to fall
3.9% from the previous quarter, based on the above forecasts and
assuming output in December is unchanged from November.

The BOJ maintained its view on the outlook for consumer prices,
saying, “The year-on-year rate of decline in consumer prices is expected
to slow as a trend as the aggregate supply and demand balance improves
gradually.”

“As for private consumption, there has been a decline in durable
consumer goods following the sharp increase in demand,” the latest
report said. “Private consumption is expected to pick up again as the
decline following the sharp increase in demand becomes less pronounced.”

The BOJ in October said, “Private consumption is likely to weaken
temporarily main due to the ending of the boost from the extremely hot
weather and the expiration of subsidies for purchasing energy efficient
cars, but is expected to pick up again thereafter.”

tokyo@marketnews.com
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