December 28, 2012 / 12:35 AM / 7 years ago

UPDATE 1-Japan factory output slumps, keeps BOJ under pressure

* Japan Nov factory output -1.7 pct vs forecast -0.5 pct

* Nov core CPI -0.1 pct, jobless rate eases to 4.1 pct

* Dec manufacturing PMI at 45.0, lowest since April 2009

* Data to keep BOJ under pressure for more stimulus

By Tetsushi Kajimoto and Kaori Kaneko

TOKYO, Dec 28 (Reuters) - Japan’s factory output fell more than expected in November after a surprise jump in the previous month, keeping up pressure on the central bank to deliver further monetary stimulus as weak global trade weighs on the export-reliant economy.

The central bank, even after loosening policy in December for the third time in four months, still faces intensifying pressure from new premier Shinzo Abe whose government was installed two days ago.

Industrial output fell 1.7 percent in November, more than triple the median market forecast for a 0.5 percent decline, data from the Ministry of Economy, Trade and Industry showed on Friday. That followed a 1.6 percent gain in October, which was the first rise in four months.

Manufacturers surveyed by the ministry, however, expect output to rise 6.7 percent in December and increase 2.4 percent in January, the data showed, suggesting a modest pick up in growth early next year.

“It’s more important that forward-looking sentiment for the January-March period is good, as output is expected to rise in December and January,” said Masamichi Adachi, senior economist at JPMorgan in Tokyo.

“That said, there still is a concern in the Japanese economy, especially in the country’s manufacturing sector, as the December PMI was really weak.”

Japan’s economy has slipped into a mild recession, hurt by weak global demand and slumping sales to China after a diplomatic row with the country. Analysts expect growth to pick up early next year, although any recovery will likely be slow and modest.

The BOJ delivered further monetary stimulus last week in response to pressure from Abe, whose party won in a landslide in a Dec. 16 lower house election, to take bolder action to pull Japan out of deflation.

The central bank also signalled setting a higher inflation target in January than the current 1 percent goal, although market participants doubt it will have the means to achieve it.

Separate data released on Friday showed Japan’s core consumer prices, which exclude volatile fresh food prices, edged down 0.1 percent in November from a year earlier, in line with the median market forecast.

Japanese manufacturing activity also put in a bleak performance in December in the Markit/JMMA Japan Manufacturing Purchasing Managers Index (PMI), declining at its fastest pace in more than three years. The PMI was also released on Friday.

Japan’s Nikkei 225 stock average climbed to a 21-month high on Friday, however, while the yen hit its lowest in more than two years, on expectations that the LDP’s determination on monetary easing would finally shake the economy from its prolonged deflation.

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