UPDATE 1-Japan factory output levels off on export slowdown

(For more stories on the Japanese economy, click [ID:nECONJP])

* July industrial output up 0.3 pct vs forecast 0.2 pct fall

* Manufacturers see output rising modestly in coming months

* Expansion in manufacturing activity slows – PMI survey
(Adds details, background)

By Stanley White

TOKYO, Aug 31 (BestGrowthStock) – Japanese factory output edged up in
July but manufacturing activity in August expanded at its slowest
pace in more than a year, suggesting that companies were starting
to feel the pinch from an export slowdown and a strong yen.

Manufacturers surveyed by the government expect output to
rise 1.6 percent in August, less than a 2 percent gain forecast a
month ago, boding ill for the already slowing economy.

The yen has remained stubbornly high despite government
efforts to talk it down. The Bank of Japan’s decision to boost
its cheap loan scheme at an emergency meeting on Monday also did
little to weaken the yen, which is hovering near a 15-year high
against the dollar hit last week.

“Japan’s economy isn’t worsening but the pace of recovery is
clearly slowing. We will likely see output growth slow
significantly, particularly in the fourth quarter when the
effects of the yen’s rise start to appear in full,” said Takeshi
Minami, chief economist at Norinchukin Research Institute.

“If the economy is performing as it is, the Bank of Japan
will continue to come under pressure to ease monetary policy
further.”

Industrial output rose 0.3 percent in July after a 1.1
percent drop in the previous month, data from the Ministry of
Economy, Trade and Industry showed on Tuesday. The median market
forecast was for a 0.2 percent decline.

The ministry’s survey of manufacturers pointed to an increase
of 0.2 percent in September after August’s expected rise of 1.6
percent.

The Nomura/JMMA Japan Manufacturing Purchasing Managers Index
(PMI) fell to a seasonally adjusted 50.1 in August from 52.8 in
July, the lowest level since 48.2 in June 2009.

The index remained above the 50 threshold that separates
contraction from expansion, however, for a 14th consecutive
month. [ID:nTWKUJE60F]

Japan’s economic growth slowed to a crawl in the second
quarter as exports to the United States and China ebbed and
stimulus-driven consumption petered out.

Annual export growth slowed for a fifth straight month in
July, trade data showed, as slowing overseas demand threatens to
inflict more pain on the export-dependent recovery.
[ID:nTOE67N01Q]
(Additional reporting by Kaori Kaneko; Editing by Edmund
Klamann)

UPDATE 1-Japan factory output levels off on export slowdown