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Economy in Brief

Japan’s IP Growth Rates Level Out And Decay
by Robert Brusca May 19, 2010

Industrial output in Japan soared in March but could not stave off an erosion in the Yr/Yr rate of growth. Output was up by 1.2% m/m across the major sectors. But that followed a result in February that was less than stellar, headlined by a 0.6% drop in IP.

The sequential growth rates in the table show growth at a Yr/Yr pace of 29.9%, a six month annualized pace of 25.6% and a three-month annualized pace of 20.9%. While the growth rates progressively step lower they are still way too elevated to be sustainable. While there is still a lot of slack in Japan’s economy some deceleration in the growth rates is just what the economy needs to keep its expansion on the ‘long track’ which is better than the ‘fast track.’

Yesterday Japan reported its service sector index took a large step back from the previous month’s value. That sort of step back is more worrisome. Japan, the US, and Europe need to drive their respective service sectors to better results. That sector is where the jobs are and that sector has been growing painfully slowly across countries.

Manufacturing continues to do well in the global economy. Japan is farther from making a full recovery that Europe or the US but it is pushing hard on the recovery path. This month’s IP report is a good one.

Japan Industrial Production Trends
  m/m % Saar % Yr/Yr Qtr-2
Date %AR 
% 0f
Cycle
 Peak 
seas adjusted Mar
10
Feb
10
Jan
10
3-mo 6-mo 12-mo Yr-Ago
Mining & MFG 1.2% -0.6% 4.3% 20.9% 25.6% 29.9% -32.8% 30.9% 86.1%
Total Industry 1.2% -1.1% 4.6% 20.3% 24.9% 28.9% -32.0% 30.5% 86.5%
MFG 1.2% -0.6% 4.3% 20.9% 25.6% 30.0% -33.0% 30.9% 86.1%
  Textiles 1.2% -2.6% 3.8% 9.4% 4.9% 2.1% -23.1% 8.1% 72.9%
  T-port 1.2% 0.8% 12.2% 71.5% 59.5% 87.0% -53.9% 88.5% 83.1%
Product Group
  Consumer Gds 3.0% -3.4% 0.9% 1.6% 8.9% 20.1% -24.6% 4.9% 87.6%
  Intermediate Gds -0.6% -0.2% 6.5% 24.8% 32.0% 43.6% -37.6% 45.9% 89.0%
  Investment Gds 2.0% 4.1% 4.4% 51.2% 34.6% 15.9% -31.4% 47.6% 76.3%
Miining 0.1% 3.3% 1.1% 19.2% -8.6% 1.4% -9.1% 14.1% 87.9%
Electric&Gas -0.9% 2.0% 2.2% 14.3% 20.2% 7.8% -7.5% 19.3% 94.5%
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