Tokyo: Japan’s industrial output plunged for a fifth straight month in February as companies slashed production amid recession at home and in its major export markets, official data showed on Monday.
Factory production in Asia’s biggest economy dropped 9.4% from the previous month as demand for Japan’s cars, televisions and other high-tech goods has dried up, the trade and industry ministry reported.
The reading was worse than a market forecast of a 9% decline.
Production had fallen a record 10.2% in January as the global downturn has battered Japan’s exports, forcing its manufacturers to lay off thousands of workers and idle plants.
“Overall, industrial production is dropping quickly,” with passenger cars, small vehicles and auto parts as well as chip-making machinery declining the most, the ministry said.
On a brighter note, production is expected to pick up as inventories run low, with the ministry forecasting a 2.9% rise for March and a 3.1% increase in April, based on the manufacturers’ own forecasts.
But the ministry remained cautious in its predictions for the world’s number two economy, where exports halved last month and which is believed to be on course for its worst recession since World War II.
“The prospects still remain uncertain despite the positive forecast for March and April,” said a ministry official.
“Companies cut down production greatly in February, in part ahead of the end of the current fiscal year to March,” he said. “It is more than possible for production data in March and April to end up negative.”
In February, the index of inventories also dropped a record 4.2%, the government report said, suggesting companies have slowly reduced their stockpiles caused by dwindling global demand.
“Inventories are finally catching up to the huge decline in production,” said Toshihiko Matsuno, research head of SMBC Friend Securities.
In a bid to kickstart the economy, Japan’s parliament last week passed a record ¥88.5 trillion ($910 billion) budget for fiscal 2009. It set aside one trillion yen in emergency reserves for projects such as public works.
Prime Minister Taro Aso also plans to launch an additional budget for the new fiscal year, starting April, to pump up the economy.