Japan industrial production up but China trade woes still felt

 
Ben Southwood
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JAPANESE industrial production jumped in December, but remains sharply down on the year after a territorial dispute with China hit trade between companies in the two countries.

Output climbed 2.5 per cent in the last month of 2012, according to statistics released by the Japanese ministry of economy, trade and industry yesterday, the fastest expansion in 18 months.

However, the growth came in below market forecasts, averaging at 4.5 per cent, and follows a 1.4 per cent decline in November.

And factory output is still some 7.8 per cent below where it was in December 2011, after a year in which disputes over the Senkaku-Diaoyu island chain drove boycotts of Japanese goods in China.

Other bearish news came from Markit’s manufacturing purchasing managers’ index (PMI) business survey for January, released late Wednesday night.

This widely-regarded index climbed from 45 in December to 47.7 in January – suggesting a slowdown in the rate of factory decline, but still a substantial slowdown in the sector.

“Operating conditions for Japan’s manufacturing sector remained challenging at the start of 2013, with a number of key barometers stuck in contraction territory,” said report author Paul Smith.