Tokyo, April 27 (Bloomberg) -- Japanese industrial production fell more than expectedin March amid waning demand for the nation's exports. Production declined a seasonally adjusted 2.1 percent in March from February, theMinistry of Economy, Trade and Industry said, more than doubling economistexpectations. The ministry had predicted a 0.8 increase after surveying manufacturersa month ago, while economists polled by Bloomberg predicted, on average, a 1percent drop. Output fell 2.9 percent in March from a year earlier. Demand for such Japanese goods as computer chips and mobile- phone parts isfalling as growth in the U.S. and Asia, the nation's two-biggest markets, slows. TheU.S. economy grew at its slowest pace in five and a half years in the fourth quarter,while Asian countries, such as South Korea and Malaysia, expect growth to slow byas much as half this year. ``Little prospect of a near-term, sharp improvement in overseas demand, in addition tothe risk of a downturn in the business-investment cycle, suggest that output couldremain weak for some time,'' said Lehman Brothers Japan Inc. economist MatthewPoggi, speaking before the figures were released. In the three months ended March 31, production fell 3.7 percent from the previousquarter, snapping a run of six straight quarterly gains.
Economy Cools Demand
Last month's decline in production was led by makers of electrical equipment andindustrial machinery. Companies said they expect production to fall 0.8 percent thismonth, reversing their forecast a month ago of a 0.5 percent gain in April, and saidthey expect another 0.8 percent decline in May. ``Of course it's a matter of concern, and nobody wants to hear that the economy isslowing down,'' said Daniel Mathieson, a spokesman for NEC Corp., the third-biggestchipmaker. Chipmakers' sales are dwindling as consumers are buying fewer personal computers.Electronics and components companies are leading the cutbacks in productionbecause stockpiles are mounting from the drop in demand. Total shipments of manufactured goods fell 2.6 percent last month from February andfell 2.9 percent from a year earlier, the ministry said. Inventories rose 0.7 percent inMarch from the previous month and rose 3 percent from a year earlier. The inventory ratio, which measures stockpiles as a proportion of demand, rose 2.5percent in March from the previous month and rose 6.6 percent from a year earlier, thereport said. Final production figures will be released in about two weeks.