Japan
Japan's economy may slow as cooling export growth prompts companies to cut output, the government's broadest outlook indicator showed.
The leading index, derived from 12 statistics including production and stock prices, fell to 20 percent in March from 54.5 the previous month, signaling growth will slow over the next two quarters, the Cabinet Office said today in Tokyo. The index has been below 50 in nine of the past 12 months.
Cooling demand for Japanese goods overseas prompted companies to cut production at the fastest pace in five years in March. Toyota Motor Corp., the world's second-largest automaker, yesterday posted its first quarterly profit drop in almost three years because of a stronger yen and a U.S. sales slump.
“Production is increasingly becoming a cause of concern for Japan's economy,'' said Junko Nishioka, a senior economist at ABN Amro Securities in Tokyo. “We're going to enter a slowdown as the U.S. slowdown hurts foreign demand.''
Slumps in output have coincided with Japan's three recessions since 1991.
Sentiment among the country's largest manufacturers fell to its lowest level in four years in March as higher oil prices and the yen's 8 percent gain against the dollar this year ate into profits http://abc-cashadvance.com.
“Japan is at a crucial point in terms of whether it will fall into a recession or not,'' Yoshiki Shinke, a senior economist at Dai-Ichi Life Research Institute in Tokyo. “How much exports will slow because of a U.S. slowdown and how much that will affect factory output is key.''
Bearing the Burden
Crude oil touched a record $124.61 yesterday, indicating companies and consumers will have to keep bearing the burden of higher energy costs in coming months. Japan's regular gasoline prices set a record high this week, according to the Oil Information Center.
Consumer spending, which accounts for more than a half of the economy, is unlikely to spur economic growth and compensate for the manufacturing slump because higher energy costs are discouraging spending.
The coincident index fell to 33.3 percent in March from 70 in February, today's report showed.