Japan's industrial output rose in April from a month earlier as expected but sluggish growth in exports tempered the gains and mixed forecasts for the coming months suggested the economy remains in a soft patch.
The 2.2 per cent rise in output, led by production of cars cars and machines for making flat panel displays and semiconductors, was mostly in line with economists' median forecast of 2.3 per cent.
In March, output fell 0.2 per cent.
Manufacturers' output - the core component of production - was expected to fall 2.3 per cent in May, mainly in reaction to strong output of cars in April, and rise 1.4 per cent in June, the Ministry of Economy, Trade and Industry said today.
"The weak forecast for May is worrying. It basically cancels out the April gains. With the forecast of a rebound in June, output would be up a marginal 0.2 per cent or so for the quarter," said Takehiro Sato, an economist at Morgan Stanley.
He and other economists identified some bright signs such as a 1.2 per cent fall in the inventories-to-shipments ratio as well as progress in firms' efforts to cut stockpiles in information technology-related sectors.
Inventories were flat in April from a month earlier, while shipments rose 2.7 per cent. Many have said a key factor for the economy this year is how soon manufacturers, particularly in the high-tech sector, can complete inventory adjustments and return to expansion.