Japan's Industrial Output Disappoints But Future Looks Upbeat

Japan's industrial output fell in May for the first time for three months, the government said June 29, but an upbeat outlook underpinned expectations of an end to zero interest rates. Industrial production declined by a bigger than expected 1% in May compared with April but was up 4.2% year-on-year, the trade ministry said in a preliminary estimate.

The month-on-month decline was mainly due to sluggish output of large and small passenger cars as well as auto parts, the ministry said. It also said that shipments by manufacturing and mining companies in May fell 1% from April, while stockpiles were down 1.4%.

The ministry predicts production will rise 2.7% in June , compared with its earlier forecast of 1.3% growth for the month. It also projects an increase of 1.1% in July from June.

Output of machinery and chemicals as well as electronics and transport equipment was expected to help boost industrial production.

Copyright Agence France-Presse, 2006

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