Japanese industrial output falls for second month

It turns out that Japan still has a chance at beating the United States in the race to recession.

The Ministry of Economy, Trade and Industry reported today that Japan's industrial output fell 1.2 percent in February. This was the second consecutive month of decline in industrial production following a decline of 2.2 percent in January.

The weak trend in industrial production was corroborated by other data released today. The NTC Research/Nomura/JMMA Purchasing Managers Index declined to a seasonally-adjusted 49.5 in March from 50.8 in February, indicating that Japanese manufacturing contracted in March. The output index declined to 48.5 in March from 50.9 in the previous month while the new orders index fell to 47.2 from 50.4.

On the other hand, after being a drag on the Japanese economy with the introduction of tighter building rules in the middle of last year, housing starts appear to be stabilising. Data today from the Ministry of Land, Infrastructure and Transport showed that 82,962 units were started in February. This was down just 5.0 percent from the previous year and an improvement from the decline of 5.7 percent in January.

Prospects for an improvement in consumer spending also got a small boost today. The Ministry of Health, Labour and Welfare reported today that Japanese wage earners' total cash earnings rose 1.3 percent in February from a year earlier. Overtime pay grew 2.6 percent, the second consecutive month of increase and the fastest rise since November 2006

One of the best available leading economic indicators, however, is telling us that the negatives outweigh the positives. The Nikkei 225 Stock Average fell 294.93, or 2.3 percent, to close at 12,525.54 today, completing a loss of 18 percent for the first three months of the year, the worst performance in the first quarter since 1990.