Japan Factory Output Falls, Dents Recovery Hopes

Japan's factory output fell unexpectedly in February, data showed March 30, suggesting the recovery in the world's number three economy remained anaemic. The fall confounded expectations for a third straight increase, although officials pointed out that manufacturers expect the slowdown to be temporary. The 1.2 percent one-month decline in industrial production was triggered largely by slower automobile and semiconductor output, surprising observers who had tipped a 1.3 percent gain. "The outcome was unexpected, as industries such as the electronic machinery industry that were supposed to show a gain in output turned out to be negative," said Yuichi Kodama, chief economist at Meiji Yasuda Life Insurance. "The data confirm that the pace of recovery in production is slow, even though the upward momentum remains intact," he added. The latest figures come despite Japanese firms revving up production in recent months as they recover from last year's quake-tsunami disaster and record flooding in Thailand, which disrupted production for manufacturers with plants there. Japan's factories posted a revised 1.9 percent output increase in January and 3.8 percent in December. And on Friday, the economy, trade and industry ministry said a survey of producers pointed to an expected 2.6 percent factory output rise in March and another increase of 0.7 percent in April.

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