— Japan Mar Industrial Output -15.3% M/M Vs Feb +1.8% M/M
— Japan Mar Industrial Output MNI Poll Median Forecast -11.0% M/M
— Japan Industrial Output Posts 1st M/M Drop In 5 Months
— METI Forecast Index: Japan April Output +3.9% M/M, May +2.7%
— METI Downgrades View: Japan Output Drops Sharply Due to Quake
— METI: But Output Expected to Recover Gradually
— Japan Q1 Industrial Output -2.0% Q/Q Vs -0.1% in Q4 2010
— Japan Mar Industrial Output -12.9% Y/Y Vs Feb +2.9%

TOKYO (MNI) – Japan’s industrial output tumbled at a record pace in
March as the March 11 earthquake disaster damaged production facilities
and disrupted supply chains for the automobiles and semiconductor
industries, data from the Ministry of Economy, Trade and Industry
released on Thursday showed.

Production at the nation’s factories and mines dropped a seasonally
adjusted 15.3% in March from the previous month, bringing the industrial
output index to 82.9.

The March headline figure was weaker than most economists expected,
with the median forecast in a Market News International survey calling
for a 11.0% fall.

In addition, the seasonally adjusted monthly fall in March was well
below the 1.4% m/m gain predicted in the ministry’s forecast survey last
month.

March industrial output in quake-hit areas slumped 31.9% m/m while
output in other areas fell 13.5%, a METI official said.

Production by all surveyed industries declined, hit by the March 11
earthquake and tsunami, he added.

Economists said while some of leading automakers and electronics
firms are gradually resuming operations, any recovery is likely to be
slow as Japan has just embarked on the reconstruction of the destroyed
infrastructure in northeastern Japan.

METI’s survey of firms’ forecasts at that time showed that overall
production was expected to rise 3.9% m/m in March — revised up from the
1.3% fall estimated in the previous survey — and would increase by 2.7%
in May (first estimate).

April output will be led by general machinery and passenger cars
while May output will be supported by general machinery as well as
information and communication electronics equipment.

Based on the latest data and the outlook for the next two months,
METI downgraded its assessment, saying that industrial output “dropped
sharply due to the Great East Japan Earthquake but it is expected to
recover gradually.”

In the previous month, the ministry said industrial production was
“continuing to show an upward movement.”

In the January-March quarter, industrial output fell 2.0%, the
third straight quarter-on-quarter drop after -0.1% in October-December
of 2010.

April-June output is estimated to fall 5.1% q/q if METI’s
projections for April and May are met and June output shows no m/m
change.

In March, output of transportation equipment — mostly automobiles
— plunged 46.4% from February, the largest drop on record, following a
5.1% rise in the previous month.

Among auto output components, output dropped by 54.0% for large
passenger cars with engine displacement of over 2000cc, by 53.7% for
small passenger cars with engine displacement of over 660cc but less
than 2000cc, and by 58.0% for output of mini-cars with engine
displacement of less than 660cc.

The March output was also dragged down by a decline in production
of general machinery including chip-making machines.

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 the nation’s trade surplus
plunged by 78.9% in March from a year earlier, as exports logged the
first year-on-year decline in 16 months.

The government estimates the cost of massive damage inflicted on
Japan’s northeastern Pacific coast at Y25 trillion ($309 billion),
making it the costliest natural disaster in the country’s post-war
history.

The estimated damage would exceed the toll of around Y9.6 trillion
from the Great Hanshin Earthquake, which hit the western Japanese port
city of Kobe on Jan. 17, 1995.

Compared with the year-earlier level, production in March fell
12.9% following a rise of 2.9% in February.

Other details from the latest data:

Shipments: March -14.3% m/m vs. February +3.3%, posting the first
fall in two months.

Inventories: March -4.3% vs. February +1.5%, marking the first m/m
fall in four months.

The inventory-to-shipments ratio: March +4.0% vs. February -3.3%,
showing in the first rise in five months.

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

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