— Japan Aug Industrial Output -1.3% M/M; MNI Forecast -0.4%
— METI Forecast Index: Japan Sep Output -2.9% M/M, Oct Unch
— Japan Aug Industry Output Posts 2nd M/M Fall In Row
— METI Cuts View: Japan Industrial Output Weakening
— Japan Aug Industrial Shipments +0.4% M/M, 1st Rise in 4 Mths
— Japan Aug Industrial Inventories -1.6% M/M, 1st Fall in 2 Mths

TOKYO (MNI) – Japan’s industrial output fell for a second straight
month in August as the global slowdown continued to hit the economy and
domestic demand lost steam on fading effects of subsidies for buying
low-emission vehicles, data from the Ministry of Economy, Industry and
Trade showed Friday.

The near-term outlook for production remains gloomy as overseas
economies have yet to show a clear sign of recovery.

Production at the nation’s factories and mines fell a seasonally
adjusted 1.3% in August from the previous month, while the industrial
output index fell to 90.5, the lowest since 89.4 in May last year.

The August headline figure came in weaker than the median forecast
for a 0.4% decline in a MNI survey of economists, while it was way below
the 0.6% fall predicted in the previous month’s METI report.

Many firms said August output fell on weaker exports of mobile
phones and their parts to China, a METI official told reporters.

METI’s latest survey of firms’ forecasts showed that overall
production is expected to drop 2.9% m/m in September — revised up from
the 3.3% fall estimated in the previous survey — before being unchanged
in October (first estimate).

Based on the latest data and the outlook for the next two months,
METI downgraded its assessment, saying that “industrial output appears
to be weakening.”

In the previous month’s report, it said “Industrial production
appears to be flat.”

Output of electronic parts and devices, which are sensitive to
changes in the global economic trend, fell 5.2% last month, the fifth
fall in the past six months.

In addition, output of transportation equipment — mostly
automobiles — fell 0.4% from the previous month, a fourth straight fall
following a 0.1% dip in July, as the positive effects of government
subsidies for buying low-emission vehicles continued to wane.

Automobile sales sagged during most of 2011 after the government
ended subsidies for buying low-emission vehicles in September 2010 but
they have been supported until recently by the resumption of the program
last December.

METI has announced that it is terminating the program this month
as planned.

Recent industry data showed that new car sales rose just 7.3% in
August as the growth pace slowed down from rises of 36.1% in July, 40.9%
in June, 66.3% in May and 92.0% in April.

Compared with year-earlier levels, Japan’s industrial production in
August fell 4.3%, marking a third straight fall after a 0.8% fall in the
previous month.

Other details from the latest data:

Shipments: Aug +0.4% m/m, the first rise in four months.

Inventories: Aug -1.6% m/m, the first fall in two months.

The inventory-to-shipments ratio: Aug -2.9% m/m, the first fall in
three months.

tokyo@marketnews.com
** MNI Tokyo Newsroom: 81-3-6860-4821 **

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