Industrial Output
Japan's industrial output fell a seasonally adjusted 0.3 percent in April from March as companies cut production due to rising inventories amid slowing demand from the United States, as well as from other key trading areas such as Europe, according to government data released on Friday. The seasonally adjusted industrial production index fell to 106.2 in April after hitting an all-time high of 110.2 in February.
Industrial output rose 1.8 percent in April from a year earlier following a 0.7 percent fall in March. The Ministry of Economy, Trade and Industry said that companies expect industrial output to rise 4.7 percent in May from April, but they anticipate that it will then fall back again 0.9 percent in June from May.
If these projections are met, the industrial output is set to rise 0.7 percent in the April-June quarter after clocking up the first decline in four quarters in the three months to March. But this is a big if.
"But there are worrying factors that we need to watch closely, which include developments in the North American markets, as well as the trend of consumer spending in Japan," a ministry official said..."In addition, we need to assess if demand for plasma TVs will pick up towards the Beijing Olympic Games this summer,".Production in the electronics and telecom equipment sector dropped 7.6 percent in April, hit hard by a 47.7 percent drop in output of plasma TVs and a 22.0 percent fall in the output of cellular phone handsets. Output in the electronics parts and device sector fell 3.9 percent, the first fall in three months, hit by a 20.7 percent fall in output of plasma display panel modules and a 14.4 percent drop in output of large liquid crystal display panels.
Output of metal oxide semiconductor ICs (integrated circuits), used in cellular phone handsets, fell 20.0 percent from March ahead of the release of summer models. As a result inventories rose in this category by 5.8 percent in April from March, the biggest increase since September 2006 when they rose 6.6 percent.
Output for the transport equipment sector, which includes cars, fell 1.2 percent in April from March stringing together the second straight monthly fall. Production of medium cars - 1000 to 2000cc - fell 1.1 percent, while production of cars with engines of 2000cc or over fell 4.4 percent. In addition, output of large motorbikes - over 125cc - fell 26.5 percent in April from March, hit by declining sales outside Japan, especially in North America.
Consumer Price Inflation
Japanese annual inflation dipped to 0.9 percent in April, thanks to a short-lived cut in a gasoline tax, but this be just temporary relief and it is quite possible that a new decade-high looms again in May. Political infighting meant that the Japanese parliament blocked the renewal of a gasoline tax of ¥25 per liter, or 91 cents per gallon, giving motorists a month of lower prices in April before the government managed to renew the charge, just as rising oil prices sent gasoline higher.
Core consumer prices, which exclude fresh food, climbed 0.9% from the same period a year earlier after rising 1.2% March, marking the seventh straight month of price gains, the Ministry of Internal Affairs and Communications said Friday.
The core "core" consumer price index - which excludes both food and energy - was back in deflation in April, falling by 0.1% year on year.
Raising expectations for a higher May core inflation figure - core inflation excludes some volatile fresh food prices, - was fuelled by rising inflation in the Tokyo area, which reports consumer prices a month earlier, since in Tokyo core annual inflation rose to 0.9 percent in May, from 0.7 percent in April.
Household Spending
Japan household spending was down 2.7 percent in April from a year earlier, the biggest decline since September 2006, the statistics bureau said on Friday in Tokyo. This was the second straight month of decline and followed a 1.6 percent drop in March. The overall income of households fell 1.6 percent, with the income of household heads up 0.3 percent. Disposable income fell 5.4 percent.
Households cut spending on bread by 6.1 percent after prices rose 11 percent. They spent 14 percent less on spaghetti following a 30 percent price increase in the month.
Unemployment
Meanwhile the labour market is slowly weakening. Japan's job vacancies fell to a three-year low in April and the unemployment rate rose as higher energy costs eroded profits and discouraged hiring.
Japan's seasonally adjusted jobless rate rose to 4.0 percent from 3.8 percent in March, the highest since September, the statistics bureau said today in Tokyo. The ratio of jobs available to each applicant, a leading indicator of the job market, fell to 0.93 last month from 0.95, the lowest since March 2005, the Labor Ministry said.
The number of successful applicants excluding new graduates dropped to 15.3 percent, the lowest since the Labor Ministry survey began in 1963.
