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Japan Industrial Output Beats Forecast

Published: February 29, 2012 | 11:40 am
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TOKYO—Japanese industrial production rose in January as production of automobiles and telecommunications devices climbed amid signs of an overall pickup in output.

Output rose 2% in January from the previous month, the Ministry of Economy, Trade and Industry said. The preliminary reading was the second-straight monthly gain and stronger than a 1.5% increase predicted in a median forecast of economists surveyed by Dow Jones Newswires.

The ministry also revised upward its assessment of production in January, saying some signs of a pickup in production can be seen. The data also showed that companies expect output to continue rising in coming months.

The gains suggest that despite the strength of the yen and sluggish demand in some overseas markets stemming from the European debt crisis, Japanese production is making a stronger than expected recovery.

Still, analysts were not overly surprised by the figures.

The result was “a little stronger than the consensus, but still within expectations,” said Mari Iwashita, chief market economist at SMBC Nikko Securities Inc.

Among positive factors she saw in the data were stronger-than-expected domestic production, apparently driven by the auto industry boosting output to make up for stoppages last year, and robust output projections by the IT sector, reflecting solid demand for products in the U.S.

Ms. Iwashita warned, though, that rising commodity prices could drive up production costs going forward and dampen demand in emerging economies such as China.

The figures showed an on-month output increase in transport equipment of 3.3%, a jump in telecommunications equipment output of 12%, and a climb of 5.9% in iron and steel production. These were the main industries contributing to the overall rise in output, the ministry said, citing large passenger cars, digital cameras and car navigation systems as specific items that had an impact on the figures.

Manufacturers said they see production continuing to climb, forecasting growth in output of 1.7% in both February and March.

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