Wednesday, April 29, 2009

manufacturers increased production to replenish inventories

TO BE NOTED: From the FT:

Japanese output shows surprise gain

By Michiyo Nakamoto in Tokyo

Published: April 30 2009 03:09 | Last updated: April 30 2009 03:09

Japan’s industrial production rose at twice the pace widely expected, climbing 1.6 per cent month-on-month in March and raising hopes the economy was over the worst of the recession.

Factory output in the world’s second largest economy rose for the first time in six months as manufacturers increased production to replenish inventories, following a run of sharp falls in previous months.

The better-than-expected result helped lift market sentiment, with the benchmark Nikkei average rising more than 250 points in morning trading.

Companies forecast that industrial production will rise further this month and next, as they step up production to make up for large inventory reductions made previously, suggesting output may be bottoming out after the sharpest decline on record in the first quarter of the year.

Exports also rose in March, from February while consumer sentiment has improved.

The Bank of Japan is likely to cut its economic forecasts on Thursday but will probably hold fire on monetary policy as it gauges the impact of recent steps to boost the economy.

The 1.6 per cent rise in industrial output follows a small rise in exports reported earlier in April, although shipments are still running around half the levels of a year ago.

The BOJ will likely assess the data at its policy meeting on Thursday, at which it is expected to keep interest rates at 0.1 percent.

With hopes high the global economy may be past the worst phase of recession, the BOJ is due to stay with its forecast that the economy will start picking up late this year or early in 2010."

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