29 March 2013 07:16 [Source: ICIS news]
(adds details in paragaphs 7-14)
TOKYO (ICIS)--Japan’s chemical production excluding pharmaceuticals fell by 9.9% year on year in February, while overall industrial production also decreased, official data from the Ministry of Economy, Trade and Industry (METI) showed on Friday.
Output of plastics declined by 15% in February from the same time a year earlier, according to the METI.
Production of synthetic rubbers was down by 6.5% year on year, the data showed.
Meanwhile, the country’s overall industrial production fell by 11% in February from the previous year, according to the ministry.
“Industrial production has bottomed out and shows some signs of picking up,” the METI said in a statement.
Based on the monthly survey by the ministry, Japanese manufacturers predict industrial production to increase by 1% in March and by 0.6% in April, the METI data showed.
“Fundamentally, the demand side recovery is not yet strong,” said Singapore-based DBS Group Research in its daily report.
The recovery in overseas shipments because of the depreciation in the yen has been “largely reflected in nominal values rather than real volumes so far,” it said.
The inventory overhang in Japan’s manufacturing sector will remain a constrain to output growth, according to DBS Group Research.
Looking ahead, a purchasing managers index (PMI) compiled by financial information services company Markit and Japan Materials Management Association (JMMA) indicated a moderate rise in Japanese manufacturing output in March.
“Higher levels of production were supported by a renewed expansion of new business levels, in part reflecting the strongest export performance recorded since February 2011,” they said in a joint report.
The headline seasonally adjusted Markit/JMMA PMI rose to 50.4 in March, from 48.5 in February. This was the first reading above the 50.0 mark since May last year, according to the report.
“There was evidence that the recent weakness of the yen provided a boost to manufacturers in March as output and new orders both returned to growth during the month,” said Andrew Harker, a senior economist at Markit.
“On the other hand, the effects of the yen depreciation can also be seen in the input costs data, with inflation rising to an 18-month high,” Harker added.
Additional reporting by Tomomi Yokomura
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