MNI POLICY: Japan March Output Drops; BOJ Caution Remains

     TOKYO (MNI) - The Bank of Japan remains cautious in its outlook for

industrial production after data Friday showed the sector slowed again in March,

unable to build on a recovery in February, as slowing global demand again

appeared to weigh. 

     March industrial production, a key piece of data for BOJ economists, fell

0.9% on month after rising 0.7% rise in February, preliminary data released

Friday by the Ministry of Economy, Trade and Industry showed.

     March's drop, outpacing the MNI median forecast of a 0.1% fall, was due

mainly to lower output of motor vehicles, production machinery and fabricated

metals, although output of electronic parts and devices rose.

     In a statement, METI lowered its assessment from last month, saying that

"production is weakening." The previous view was "production is marking time."

     Based on its survey of manufacturers, METI projected that industrial

production would rise 2.7% on month in March (revised from +1.1% forecast last

month) and rise 3.6% in April.

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

fall just 0.5% on month in March.

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

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

[TOPICS: MMJBJ$,M$A$$$,M$J$$$]