Japan Struggles with Slowing Inflation Rate, Industrial Production Falls

Hiruki Nakamura
26 Dec, 2014
New York City

Inflation index slowed for the fourth month in a row and industrial production fell in November in Japan. Auto production also declined 12% in the month. Sumitomo Mitsui Financial Group agreed to acquire consumer banking business of Citigroup Inc in Japan.

[R]4:30 PM Tokyo – Inflation index slowed for the fourth month in a row and industrial production fell in November in Japan. Auto production also declined 12% in the month. Sumitomo Mitsui Financial Group agreed to acquire consumer banking business of Citigroup Inc in Japan.[/R]

Stocks in Tokyo gained in thin trading and inflation index slowed for the fourth month in a row and industrial production declined.

The Ministry of Internal Affairs and Communication said consumer price index in November jumped 2.4% followed by 2.9% climb in the previous month.

From a year ago, consumer prices index in November slipped 0.4% after declining 0.3% in October.

Consumer prices index, excluding fresh food, dropped to 2.7% annual rate from 2.9% rate in the last month.

In Tokyo area, consumer prices remained unchanged from a year ago after falling 0.4% in November.

The Ministry of Economy, Trade and Industry reported industrial production in November declined 0.6% from 0.4% increase in October.

For the year, industrial production declined 3.8% compared to 0.8% decrease in October.

Shipment in November plunged 4.5% from a year ago month.

In a separate report, the same department said retail sales in November increased 0.4% but dropped 0.3% from a year ago month. In October sales jumped 1.4%.

The Ministry of Internal Affairs and Communications stated seasonally adjusted jobless rate in November was stable at 3.5% from October and number of unemployed persons in November was 2.19 million, a decrease of 30,000 or 12% from a year ago month.

The department added household spending in November declined 2.5% from a year ago month followed by 4% drop in October.

Auto Production Drops 12% in November

The Japan Automobile Manufacture’s Association reported total automobile production in November plunged 12.2% to 743,289 units compared to 846,270 units a year ago month.

Production of passenger cars in the month plummeted 14% and production of trucks and buses dropped 1.6% and 2.1% respectively. Motorcycle production slid 0.2% after increasing in October.

Automobile exports in November tumbled 11.5% to 368,113 units from a year ago month.

The Nikkei 225 Stock Average edged up 10.21 to 17,818.96 and the broader Topix index added 6.24 to 1,427.50. For the week, Nikkei 225 climbed 2.6%

The yen slid 0.08% to 120.29 against one dollar.

Stocks in Review

J. Front Retailing Co Ltd dropped 2.3% to 1,423 yen after the online retailer reported net sales in the nine-month ending in November slid 0.3% to 828.62 billion yen from 831.05 billion yen a year ago period.

Net income in the period tumbled 56.5% to 10.13 billion yen compared to 23.32 billion yen and diluted earnings per share declined to 38.40 yen from 88.31 yen in the same period a year ago.

The retailer forecasted net sales in the year ending in February to increase 1.3% to 1.16 trillion yen but net income to plunge 39.8% to 19 billion yen.

Japan Process Development Co Ltd slumped 2.9% to 1,112 yen after the information technology provider reported net sales in the second-quarter ending in November climbed 13.8% to 2.73 billion yen from 2.40 billion yen a year ago period.

Net income in the quarter surged 148.8% to 159 million yen compared to 64 million yen and earnings per share jumped to 30.88 yen from 11.58 yen in the same period a year ago.

JFE Engineering Corp, the engineering company and partners secured order to build a biomass power plant for Toyohashi, Aichi Prefecture with an estimated cost of 14.8 billion yen using sewage and food waste.

Mitachi Co., Ltd plunged 5% to 745 yen after the semiconductor maker said net sales in the second-quarter ending in November jumped 2.7% to 17.57 billion yen from 17.11 billion yen a year ago period.

Net income in the year climbed 4.4% to 442 million yen compared to 423 million yen and earnings per share increased to 60.16 yen from 57.62 yen in the same period a year ago.

Sumitomo Mitsui Financial Group, Inc rose 0.7% to 4,435.50 yen after the financial service provider agreed to acquire Japanese retail banking business from the U.S.-based Citigroup Inc for about 45 billion or $330 million.

The transaction is expected to close in October 2015.