Japan Industrial out put rises

Japan's industrial output rose in May for the third straight month, with manufacturers making further progress clearing stock and revving up production as stimulus measures began to bear fruit, the government said Monday. Industrial production rose 5.9% on month in May, according to preliminary data from the Ministry of Economy, Trade and Industry, matching the revised 5.9% climb in April -- the sharpest in over half a century. The rise in output was led by the automobile, electronics and iron and steel sectors, but almost all sectors saw increases, fueling expectations for a strong rebound in manufacturing in the April-June quarter. Production fell only in the pulp, paper and textile sectors. While the rise fell short of the 6.9% increase expected on average by economists surveyed by Dow Jones and the Nikkei, economists said the data confirmed the view that inventory adjustments are winding down, exports have bottomed out and that government stimulus measures are having some effect. "Government stimulus measures in Japan -- with purchase incentives for environmentally friendly cars, for example -- and stimulus packages overseas in countries like China and Germany are helping to support production," said Kyohei Morita, chief Japan economist at Barclays Capital. Last month, Japan enacted a record Y13.93 trillion extra budget funding fresh stimulus measures including subsidies for eco-friendly autos and electronics, as well as unemployment aid to curb the fall in household spending as the country's jobless rate continues to climb. A 24.8% rise in transport equipment and a 10.5% increase in electronic components and devices led the overall rise in industrial output, according to the METI data. That came as shipments rose for the third straight month, increasing 4.5%, the sharpest jump since September 1992, compared with a revised 3.0% rise in April. "Shipments, particularly of consumer durables, remained very strong, as policy has started to support the economy, especially in the auto sector," said UBS Securities' economist Takuji Aida.

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