There’s been another small but significant change in official government attitude to the current state of the Japanese economy.
The government now says production has weakened from previous levels, a sign the recovery in our second most important export market is fading.
The Government said yesterday that industrial production fell a seasonally-adjusted 1.8% in October from September in October.
Industrial production is now up 4.5% from a year ago, compared with the 11.5% in September.
That was after a restated 1.6% fall in September (minus 1.9% originally reported).
October’s fall came after a surge in demand in September for cars, appliances and cigarettes because of the ending or changes to stimulus concessions, or a tax rise in the case of cigarettes.
To a large extent a fall in output was expected.
Japan’s eight leading automakers reported a 9.4% fall in car production in October, led by a 22% fall for industry leader Toyota.
The 237,089 cars produced by Toyota was the company’s lowest October output for more than 30 years.
In fact the rise in sales of cars, appliances and cigarettes helped Japan’s third quarter growth rise an annual 3.9% according to the first estimate.
But that is now forecast to fall sharply and perhaps become negative this quarter and the industrial production figures will add to that idea.
Exports weakened in September and again in October, led by falls in shipments to Asia (but not to China in October).
The fall in October production was actually better than the market was looking; forecasts had estimated the fall at around 3.3%.
It was the fifth straight monthly fall, according to preliminary figures released Tuesday by the Ministry of Economy, Trade and Industry.
And shipments fell for a fourth successive month.
But the ministry downgraded its assessment of industrial production, saying "production has weakened" compared to the previous month, when its said output showed a "weakening tendency".
The department said the industries that mainly contributed to the decrease are as follows: transport equipment, electronic parts and devices and other manufacturing, in that order.
While the products that mainly contributed to the fall were large and small passenger cars and mobile phones.
But looking to November and December, the ministry expects industrial production to rise 1.4% in November and 1.5% in December.
Industries that expected to contribute to this expected increase in November are general, transport and electrical machinery, in that order.
The department said the industries expected to contribute to the increase in December are transport equipment, "others" and information and communication electronics equipment, in that order.
So it was perhaps not surprising that Japan’s unemployment rate in October rose to 5.1% from the previous month’s 5.0%.
That came after a fall in retail sales, the first for nearly a year and another month in October of deflation at all measures of price inflation.
And South Korea also reported a fall in output in October.
The 4.2% drop was a surprise and analysts are now looking for the central bank to leave interest rates unchanged at its meeting this month.
And the Indian economy grew 8.9% in the third quarter, a bit better than expected.
Analysts had been looking for an 8% rise.
Growth in the second quarter was revised to 8.9% from 8.8%.
But inflation remains a concern, although the better than expected monsoon will help reduce the pressures on food prices in the next few months.
