Japan’s Industrial Production Increases Less Than Expected

Japan’s industrial production increased less than estimated in January, in a slowdown likely to be temporary caused by declining output of mobile phones and flat screen televisions.

Factory output climbed 2.4 percent from December, when it rose 3.3 percent, the Trade Ministry said in Tokyo today. The median estimate of 29 economists surveyed by Bloomberg News was for a 4 percent gain.

Companies plan to increase output 0.1 percent this month and 1.9 percent in March, according to a survey in today’s report, setting the stage for the first advance in production in three quarters. Growing demand in emerging Asia is prompting Japanese companies such as Sony Corp. and Canon Inc. to forecast higher sales and consider expanding output capacity.

“The January figure came in a lot weaker than expected, but we don’t need to be too worried as the outlook figures point to an expansionary trend,” said Takuji Okubo, chief Japan economist at Societe Generale SA in Tokyo. “Production will likely be relatively robust in the first half of the year.”

The yen traded at 81.69 per dollar at 10:37 a.m. in Tokyo and the Nikkei 225 Stock Average fell 0.7 percent amid concern about unrest in the Middle East. The yield on the benchmark 10- year bond fell to 1.23 percent.

Retail Sales

Retail sales rose 0.1 percent in January, beating economists’ forecasts for a 1.5 percent drop, a separate report from the trade ministry showed today. Consumer spending has been cooling after the government scaled back a stimulus program for household appliances in December and in January, and is scheduled to end the incentives in March.

Canon, the world’s largest maker of digital cameras, is considering expanding production capacity in Zhuhai, southern China, as it aims to counter mounting competition and falling prices, Masaya Maeda, head of the Tokyo-based company’s Image Communication Products Operations, said on Feb. 14.

Sony forecast its television sales in India may almost double to about 1.6 million units in the year starting April, Masaru Tamagawa, Sony India’s managing director, said on Feb. 18.

Output may start slowing in the second half of this year as growth in China slows and European nations implement fiscal austerity programs to counter the region’s debt crisis, Societe Generale’s Okubo said.

Mazda Factory

Mitsubishi Motors Corp., maker of the i-MiEV electric car, said this month that net income fell 75 percent in the three months ended Dec. 31 on a drop in domestic sales after the government ended a program to subsidize fuel-efficient car purchases.

Mazda Motor Corp. may pull out from a U.S. factory it operates jointly with Ford Motor Co. after production turned unprofitable, Chief Financial Officer Kiyoshi Ozaki said on Feb. 18.

While the economy contracted in the final three months of 2010, gross domestic product will probably expand 1.47 percent in the year starting April, according to the average forecast of 43 economists in a survey by the government-affiliated Economic Planning Association released on Feb. 10.

A government report released earlier this month showed that machinery orders, an indicator of capital spending in three to six months, rose for the first time in four months in December.

To contact the reporter on this story: Keiko Ujikane in Tokyo at kujikane@bloomberg.net

To contact the editor responsible for this story: Paul Panckhurst at ppanckhurst@bloomberg.net

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