Japan's industrial production fell more than expected in June, government data showed on Thursday, but economists were not alarmed by that first dip in four months, saying that production should pick up again in coming months. Industrial output fell 1.3 percent in June from May, more than a median forecast of a 0.5 percent decline in a survey of economists last week, as firms turned cautious about demand after strong growth earlier this year. However, for the April-June quarter, industrial production was up 2.6 percent from the previous three-month period, the fourth straight quarter of gains. "June figures were a bit weaker than expected. But April-June production rose and forecasts for July and August are up. Even if the September figure is flat, we can expect a 1.7 percent quarter-on-quarter rise in the July-September period," said Mamoru Yamazaki, chief economist at Barclays Capital. "I believe that production will continue expanding for a while, helped by firm external demand and an expansion in domestic demand including consumption," he added.
Manufacturers' output -- the core component of production -- was expected to rise 1.6 percent in July and another 1.0 percent in August, the Ministry of Economy, Trade and Industry said. The ministry reiterated its assessment that industrial output was on a mild rising trend. Japan's economy grew by a real, annualised 6.1 percent in the January-March quarter, outstripping U.S. growth in the same period of 3.9 percent, as an export-led recovery filtered through to capital spending and private sector consumption. Industry data on Wednesday showed Japanese automobile production rose 6.9 percent in June from a year earlier. Brisk demand both at home and abroad for consumer electronics goods such as digital cameras, flat-panel TVs and DVD players has helped to bolster profits at firms such as Sony Corp. <6758.T> and Sharp Corp. <6753.T>, which reported strong earnings for the April-June quarter on Wednesday. But those firms did not revise up their full-year figures, given concerns about slackening demand and oversupply ahead. Takao Yuhara, Sony's corporate senior vice president, told reporters it was cautious about overseas demand. "In terms of electronics, the U.S. market is still quite unpredictable so we've decided to take a conservative view with our full-year outlook," he said. Thursday's data also cast some doubt on the strength of high-tech demand, but economists were not overly concerned.
"It appears that digital electronic goods such as mobile phones and flat-screen televisions are not selling as well as initially thought, and manufacturers are trying to focus on cutting down inventory," said Yoshimasa Maruyama, senior economist at Mizuho Research Institute. "This is more of an adjustment effort on the part of manufacturers -- an attempt to avoid a sharp fall later on. There's no reason to be so worried about the overall outlook." On the consumer spending front, government data on Wednesday showed retail sales in June were down 2.9 percent from the same month a year earlier. But a recent heatwave and steady demand for electronics goods are expected to underpin a recovery, and household spending has been relatively robust amid an improvement in job conditions.///www..com