REPEAT:MNI 5 THINGS: Japan May Factory Output Dips; on Uptrend

Repeats Story Initially Transmitted at 05:34 GMT Jun 29/01:34 EST Jun 29

--MNI: Japan May Industrial Output -0.2% M/M; MNI Median -1.2%

--Japan METI Forecast Index: June Output +0.4% M/M, July +0.8%

--METI: June Output Fcast Adjusted For Upward Bias -0.1% M/M

--Japan Q2 Factory Output Seen Rebounding Q/Q After Q1 Slump

--METI Keeps View: Factory Output Picking Up Moderately

     TOKYO (MNI) - Japan's industrial output posted the first month-on-month

drop in four months in May but the decrease was much smaller than expected,

raising hopes that the economy will rebound in April-June after a temporary

slump in the first quarter, preliminary data released Friday by the Ministry of

Economy, Trade and Industry showed.

     The key points from the latest industrial production data:

     * Industrial production fell 0.2% on month in May, coming in stronger than

the MNI median economist forecast for -1.2%. It marked the first month-on-month

drop in four months after +0.5 in April, but the level of the Index of

Industrial Production is relatively high. The IIP average in April-May was

104.5, up from 102.5 for the January-March, indicating that factory output will

rebound in Q2 after posting the first drop in two years in Q1.

     * The May decrease was led by lower output of passenger cars, steel

products and electrical machines. It was partly offset by higher output of

electronic parts and devices, production machinery and computers.

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

production would rise 0.4% on month in June (revised up from -0.8% forecast last

month) and gain a further 0.8% in July.

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

slip 0.1% on month in June. Based on this assumption, factory output would rise

1.9% on quarter in April-June, the first rise in two quarters. In January-March,

output slumped 1.3% from October-December, when it rose 1.6%. It was the first

q/q drop in eight quarters.

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

up moderately." But it also noted that inventories remained high, rising 0.6% on

month in May, the first rise in two months after falling 0.6% in April. The

index of inventories rose to 113.5, the highest level since 114.2 seen in March

2016.

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