MNI 5 THINGS: Japan June Factory Output Down, Q3 Seen Flat

--Japan June Industrial Output -2.1% M/M; MNI Median -0.4% 

--Japan METI Forecast Index: July Output +2.7% M/M, Aug +3.8% 

--METI: July Output Fcast Adjusted For Upward Bias +0.2% M/M 

--Japan Q2 Factory Output +1.2% Q/Q After -1.3% Q1 

--METI Keeps View: Factory Output Picking Up Moderately

     TOKYO (MNI) - Japan's industrial output posted the second straight

month-on-month drop in June, but production rebounded in April-June, indicating

the economy was back on a modest growth track after a temporary slump in Q1,

preliminary data released Tuesday by the Ministry of Economy, Trade and Industry

showed.

     The key points from the latest data:

     * Industrial production fell 2.1% on month in June, coming in weaker than

the MNI median economist forecast for -0.4%. It marked the second straight drop

after -0.2% in May. In April-June, output rose 1.2% from January-March, when it

fell 1.3%.

     * The June decrease was led by lower output of chip-making equipment due to

delayed delivery schedules, seasonal chemical products and fabricated metals.

Electronic parts and devices, key export items, saw their output up, but

production of passenger cars was much smaller than expected, leading to the

overall drop in industrial production.

     * Based on its survey of manufacturers, METI projected that industrial

production would rise 2.7% on month in July (revised up from +0.8% forecast last

month) and gain a further 3.8% in August.

     * Adjusting the upward bias in output plans, METI forecast production would

rise just 0.2% on month in July. Based on this assumption and if September

output were flat, production would fall 0.1% on quarter in July-September, the

first drop in two quarters.

     * METI maintained its assessment, saying industrial production is "picking

up moderately."

--MNI Tokyo Bureau; tel: +81 90-2175-0040; email: hiroshi.inoue@marketnews.com

--MNI Tokyo Bureau; tel: +81 90-4670-5309; email: max.sato@marketnews.com

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