TOKYO (AFP) - Japanese industrial output rose only 0.3 percent in August, suggesting after a series of recent weak data that the recovery in the world's second-largest economy is slowing.
The Ministry of Economy, Trade and Industry said Thursday in a preliminary report that output rose 0.3 percent from July to post the first increase in three months while it maintained its view that "overall output is on a gradual uptrend."
A survey of manufacturers by the ministry showed industrial output would rise 1.3 percent in September but then fall 0.5 percent in October.
Economists said the August data indicated that the pace of Japan's economic growth was slowing.
"The rise was within a range of earlier projections. In other words, it was as weak as projected earlier," said Shinichiro Kobayashi, economist at UFJ Institute.
"Companies put on the brakes on production after seeing drops in shipments while inventories are building up," he said. Stockpiles were especially higher in the electronic parts and devices sector.
Industrial shipments fell 2.1 percent in August while inventories rose 2.0 percent compared with July.
"Japan's recovery is approaching its peak," Kobayashi said, while adding that a slowdown in the coming months would be minor and the economy should start to pick up again in mid-2005.
Compared with a year earlier, industrial output rose 9.9 percent in August to mark the 12th consecutive gain on the back of robust exports and corporate capital spending.
In July, output was unchanged month-on-month but was up 5.9 percent year-on-year.
Yoshimasa Maruyama, senior economist at Mizuho Research Institute, said Japanese growth was coming back to a moderate pace partly because of easing demand for digital devices after the Athens Olympic Games and slower global growth.
Nonetheless, Maruyama said Japan's economy would keep growing.
"Inventories are still in an adjustment phase but you don't need to be too pessimistic about the outlook for Japan's economy," he said.
"The rise in inventories is largely due to increases in the steel and auto sectors, both the result of seasonal factors."
The ratio of inventory to shipments for the electronic parts and devices sector rose 3.1 percent in August but that was far below the pace in July, when it ballooned 24.9 percent, Maruyama noted.
The 2.1 percent decline in shipments stemmed partly from a record number of typhoons that hit Japan, said Akiyoshi Takumori, chief economist at Sumitomo Mitsui Asset Management.
"Typhoons halted exports of steel products," he said, adding shipments of automobiles were also hampered.
The Tokyo Stock Exchange's benchmark Nikkei-225 index gained 0.35 percent to end at 10,823.57 Thursday to snap a nine-day losing streak although profit-taking eroded early gains made on the industrial output data and a rebound on Wall Street.