Tokyo, April 17 (Bloomberg) -- Japanese factory usage rose in February as production rebounded fromasteep decline the previous month. The operating ratio, which measures how much factory capacity is being used, rose 1.8 percent inFebruary, seasonally adjusted, the Ministry of Economy, Trade and Industry said. From a year ago,factory usage fell 4.2 percent, while capacity dropped 1 percent, the 25th straight decline. The gain may be temporary, because a decline in exports is forcing companies to slow production andleave equipment idle, which will also curtail investment. ``Capital spending has been an important driver of growth over the past year, but the decline in capacityutilization is likely to temper investment spending plans,'' said Matthew Poggi, an economist at LehmanBrothers Japan Inc. before the figures were released. Cutbacks to production have prompted the central banks and the government to give their most downbeatassessment of the economy in about five years. The Cabinet Office last week said the economy is``weakening'' and the Bank of Japan yesterday said the country is ``adjusting'' to a drop in exports. Machinery orders, a leading indicator of capital investment, probably fell for the first time in six quarters inthe three months ended March 31, breaking a record growth streak, according to government estimates. The government report also contained final figures for industrial production, which rose 1.1 percent inFebruary from January, more than the initial estimate of a 0.4 percent increase.
In January, production fell 4.4 percent.
Most of the revision was accounted for by an increase in production of pharmaceuticals. Overall,production of passenger cars and ships contributed most to the rise. Companies had expected a 2.7 percent increase, making it the eighth straight month where productionschedules were undercut. With manufacturers expecting a 0.8 percent decline last month, economistsexpect industrial production to post the first quarterly drop in seven quarters in the three monthsto March31. Shipments, a measure of demand, rose 1.2 percent in February from January. Stockpiles rose 1.1percent. The inventory ratio, which measures inventories as a proportion of shipments, rose 0.6 percent. The forecast gain for production this month was cut to 0.5 percent from 0.6 percent, the ministry said.