Japan's factory output rebounds

29 June 2011 Last updated at 02:17 GMT Car production was hit badly due to a shortfall of parts following the earthquake and tsunami Japan's factory output rose at a faster-than-expected pace in May as the economy continued to recover from March's earthquake and tsunami.

Japan's industrial output jumped by 5.7% in May, compared with the previous month, the latest government data showed.

The twin disasters had damaged factories and caused disruption to the country's supply chain.

This is the second successive month that industrial output rose in Japan.

"As supply chains recover from the damage caused by the March earthquake, output is showing a strong recovery, mainly in cars," said Yuichi Kodama, of Meiji Yasuda Life Insurance.

'Downside risk' Some of the biggest Japanese manufacturers had to suspend or curb production after the earthquake and tsunami, due to a shortage of parts and electricity supply.

While an improvement in the supply chain has eased the parts shortage, power cuts still remain a big concern for manufacturers, not least because of peak consumption during the summer months.

"The prospect of power shortages in the summer is making companies cautious about the outlook," said Mr Kodama.

Analysts also warned that if a solution to the power crisis is not found quickly, it may have an adverse affect on the overall economy.

"Longer-term, power constraints are a downside risk to the economy as more companies may decide to shift their production overseas, which would weigh on Japan's potential growth rate," said Yoshiki Shinke, of Daiichi Life Research Institute.

Back on track

One of the sectors worst hit by the twin disasters was Japanese car manufacturing.

A shortage of parts coupled with power supply constraints saw leading manufacturers like Toyota and Honda suspend production at their factories.

However, the latest production numbers show that the pace of decline at Japan's car manufacturers is slowing down.

On Tuesday, Toyota reported that its domestic production in May fell by 54.4%, compared with the same month last year. Last month it reported a 74.5% drop.

Honda said its Japanese factories produced 53.4% fewer cars in May. Its output had plunged by 81% in the previous month.

Meanwhile, Nissan said production at its domestic factories actually increased by 0.8% in May, compared with a 48.7% drop in the previous month.

Analysts said that the recovery in the sector had been faster than they had expected.

"Carmakers have been able to recover very quickly from the loss of output after the earthquake," said Shuji Tonouchi, of UFJ Morgan Stanley Securities.

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Japan's retail sales recovering

28 June 2011 Last updated at 01:03 GMT Japanese consumers have refrained from spending in the aftermath of the earthquake and tsunami Retail sales in Japan fell less-than-forecast in May as the country starts to recover from the 11 March earthquake and tsunami.

Retail sales fell 1.3% in May compared with the same month last year, according to the latest government data.

However, compared with the previous month, retail sales rose by 2.4%.

Analysts said that the numbers were an indicator that the Japanese economy was starting to recover.

"The pace of decline has slowed, reflecting a quick recovery from the damage to supply chains," said Hioshi Miyazaki of Shinkin Asset Management Company.

Natural factor

While improving supply chain conditions have played their part in better output from Japanese factories, analysts said that natural factors such as the weather was also playing a part.

"Summer clothing seems to have sold well due to the hot weather in May," said Junko Nishioka of RBS Securities.

"This trend may continue in June and beyond," she added.

Mari Iwashita of SMBC Nikko Securities added that a change in weather may have a positive affect, not just on retail sales but also on other areas of the economy.

"A hot summer could result in more spending, especially with corporations allowing employees to take longer summer holidays." said Mr Iwashita.

"The picture may not be bad if summer bonuses are spent domestically, such as on travel," he added.

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Japan's car production plunges

27 May 2011 Last updated at 07:21 GMT Carmakers have been amongst the hardest hit businesses by the earthquake and tsunami in Japan Japanese car production plunged in April as manufacturers continued to face a shortfall in parts supply.

Toyota, the world's biggest carmaker, said its domestic production fell 74.5% compared with the same month last year.

Honda's Japanese output plummeted 81%, while Nissan reported a 48.7% decline at its factories in Japan.

Japan's carmakers have been facing a shortage of parts as the 11 March earthquake and tsunami disrupted the country's supply chain.

As a result, the country's top car manufacturers have been forced to suspend or slow down production at their factories.

Global impact

The effects of the disruption in Japan's supply chain have been felt well beyond the country's shores.

Leading Japanese carmakers have reported a sharp drop in their global production numbers as well.

Toyota Motors, which has curbed production at its plants in various countries, said its factories outside Japan produced 25% fewer vehicles in April.

Honda Motors has reported a decline of 43.5% in output at its overseas factories, while Nissan Motors said its foreign output dipped by 12.7%.

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AUDIO: Japan's workers told to dress Hawaiian

19 May 2011 Last updated at 11:13 GMT Help

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