Japanese Output Grows For Fifth Month But Seen Slowing

Japanese factories ramped up production for a fifth straight month in December, but growth was more moderate than anticipated and a slowdown is expected , official data showed Jan. 30. Economists said production in the coming months would be curtailed by a diminishing appetite for cars in the U.S., although it was not expected to hit Japan's overall economic recovery.

Industrial output rose by 1.4% in December, just under a revised 1.5% in November and below the market expectation of 1.8% growth.

Year-on-year, output grew by 3.8% in December. Shipments picked up 1.1% from November while inventory stockpiles also grew, by 0.3%. For 2005, industrial production increased an unadjusted 1.3% from the previous year.

The data signaled that the world's number two economy remains on a steady recovery path after a slump stretching back over a decade, analysts said. "Although the figure was not as high as the market expected, I can say the economy is definitely going upward just by looking at output rise in the fifth straight month," said Masayoshi Yano, strategist at Tokai Tokyo Securities Co.

But Akio Yoshino, chief economist at Societe Generale Asset Management, pointed out that the market has expected stronger growth in output for more than six months. He also said the pace of growth in export activity could slow, in light of U.S. gross domestic product which cooled to a 1.1% annual rate in the quarter to December, the lowest in three years. The slowing growth in the U.S. could hit Japanese automakers. "New vehicle demand in the U.S. is bound to peak out this year, which may slow output for Japanese makers, although to a much lesser extent than U.S. makers," Daiwa Institute of Research senior economist Junichi Makino warned.

Production of motor vehicles rose 2.7% in 2005, the fourth straight year it has grown, the Japan Automobile Manufacturers Association said, with 11.8% year-on-year expansion in December. Even if the auto industry is hit in 2006, economists were not worried about the nation's recovery.

Copyright Agence France-Presse, 2006

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