adminIndustrial output will rise 1 percent in March after a 0,1 percent on-month drop in February, according to forecasts submitted for a Trade Ministry report released in Tokyo yesterday.
Production tumbled 11 percent in February from a year earlier, the steepest since April 2011, reflecting last year’s recession.
A Bank of Japan survey April 1 also may show a brightening outlook as Prime Minister Shinzo Abe seeks to reflate the world’s third-largest economy, with the Tankan large manufacturers’ index set to rebound by the most since 2011, according to economists surveyed by Bloomberg News. Abe needs companies to boost investment and wages as a complement to new BOJ Governor Haruhiko Kuroda’s campaign to end deflation.
“Japan’s economy is going to improve in the coming months due to a weak yen and a pickup in exports,” said Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute, a top-three forecaster of the economy last quarter in Bloomberg News surveys.
“The Bank of Japan will do its best to live up to market expectations by boosting monetary stimulus and that will support corporate and household sentiment.”
The yen rose 1 percent to 94,06 per dollar as of 3:23pm in Tokyo. The currency is poised for its longest string of monthly losses in more than a decade on Abe’s pledges to revive the economy. The Nikkei 225 Stock Average closed 0,5 percent higher, capping its best back-to-back quarterly performance since 1972.
South Korea’s industrial production unexpectedly fell in February, data showed today, signalling that an economic recovery may be slower than expected and bolstering the case for a fiscal boost after Finance Minister Hyun Oh Seok announced plans for stimulus yesterday.
The yen’s fall has drawn criticism from Korean firms, with carmaker Kia Motors Corp saying yesterday the currency is becoming a “weapon” for Japanese competitiveness.
While companies in the Nikkei index showed a more than 50 percent decline in aggregate net income in the four years through 2012, according to data compiled by Bloomberg, firms including Toyota Motor Corp have raised profit estimates for the fiscal year starting next month.
Toyota agreed this month to pay its employees in Japan the biggest bonus in five years and Kubota Corp a tractor maker, predicts record sales.
The Tankan large manufacturers’ index will rise to minus seven in March from minus 12 in December, according to the median forecast of 22 economists surveyed by Bloomberg News.
The outlook index for large manufacturers, a gauge of how they see conditions in three months, may increase to plus one from minus 10. A positive reading means optimists outnumber pessimists.
Improving sentiment may help Kuroda achieve a 2 percent inflation target as he prepares to unleash stimulus at his first policy-setting meeting on April 3-4.
The new central bank chief, who has said that influencing expectations is crucial to ending deflation, told lawmakers yesterday that he would push for more easing until the target is achieved.
Japan’s consumer prices excluding fresh food dropped 0,3 percent in February, data showed today, failing to rise for the 10th month.
Barclays Plc said in a research report yesterday that the result was due in part to “base effects linked to last year’s rise in TV prices” and predicts the gauge will turn positive from around May.
Despite the improved manufacturing outlook, the output fall in February and a predicted negative reading on the Tankan’s main index may reflect lingering caution, with Honda Motor Co. on January 31 forecasting lower net income for this fiscal year, based on an exchange rate of 81 yen per dollar. – Bloomberg.
Online Reporter