The report also showed that companies plan to cut production further in February, with manufacturers antipitaing that output will slide 2.9 percent from January, before rebounding by 2.8% in March. It should be noted though, that despite the monthly drop, the year on year level was still up in January. However as far as Q1 2008 growth goes this number is far from being encouraging, and does not bode well at all for the coming months.
Two weeks ago, in a general Japan analysis, Claus had this to say:
In Morgan Stanley's GEF (edition 8th of February) Takehiro Sato points towards industrial production trends as well as US GDP readings and tantamount to the forecast that Japan is heading more meager times ...
"The risk of dual recession is mounting. Our US economics team is already calling for capex-induced negative GDP growth in successive quarters (Jan-Mar, Apr-Jun), for a technical minor recession in the first half of the year by definition. We are forecasting that Japan will cling on to a modicum of growth in the Oct-Dec 2007 quarter, boosted by external demand, but there is a possibility that, like the US, that quarter will mark the peak and the economy will retreat in Jan-Mar. Future data for industrial production will tell us if this is the case."
Well, if Takehiro Sato is right, then the industrial production data are now telling us just this.