Japanese factory output seen falling in February, but outlook solid
By Kaori Kaneko
TOKYO (Reuters) - Japan's factory output is forecast to have slipped in February after the previous month's jump, but the pullback is seen as temporary by analysts who expect production to remain solid thanks to strong earnings, a Reuters poll showed.
Factory output last month probably took a hit as the timing of the Lunar New Year curbed exports growth, analysts said.
Industrial production is seen down 1.8 percent in February from the previous month, according to the poll of 21 economists. That would be the first fall in three months after a revised 3.7 percent gain in January which was the fastest rise in a year.
"We expect the factory output will regain momentum as the effects of a weak yen have already started to spread to exports and firms' capital spending," said Takumi Tsunoda, senior economist at Shinkin Central Bank Research Institute.
"Firms' capital expenditure plan for the new fiscal year (starting April) will likely be good as corporate earnings are strong."
The trade ministry will release the factory output data on March 30 at 8:50 a.m. (March 29 at 2350 GMT).
Markets will also be keenly watching manufacturers' output forecasts for March and April, which will accompany the data.
Those forward indicators are important as analysts try to gauge the pace of growth given the economic recovery has remained fragile since last year's recession.
The Bank of Japan's quarterly "tankan" business sentiment survey, due on Wednesday, is forecast to show firms' confidence picked up in the first quarter as a weak yen boosts exports and falling oil prices reduce operating costs.
In the tankan survey, large companies also probably raised their capital spending plans slightly for the new fiscal year starting in April, an encouraging sign for the economy.
Capital spending and wage increase are widely considered key to generating a virtuous cycle of private-sector-led growth.
Japan's economy took a hit from a sales tax hike last April, and the recovery has struggled to gain momentum due to sluggish consumer spending.
(Editing by Shri Navaratnam)
