Industrial output marks biggest drop since 2003

Industrial production plummeted a seasonally adjusted 3.1 percent in March — far below a market median forecast and the largest drop since January 2003 — hit by slowing demand for cars in the U.S. market, the government said Wednesday.

The index of output at mines and factories stood at 106.8 against the base of 100 for 2005, the Ministry of Economy, Trade and Industry said in a preliminary report.

The headline reading, which followed a revised 1.6 percent gain in February, compared with the average market forecast of a 0.8 percent decline in a Kyodo News survey.

The figure coincided with the government's recent view that the economy has been losing steam.

Earlier, the Cabinet Office said in its key monthly assessment for April that the recovery "appears to be pausing recently," citing the increasing fear of a U.S. recession.

The index of industrial shipments fell 3.9 percent to 107.0, also posting the largest percentage decline under the new base year of 2005, which dates back to January 2003, a METI official said. The index of industrial inventories rose 0.2 percent to 105.6.

The base year was changed to 2005 from 2000 starting from its revised report for February on April 17.

The official said the change did not create a drag on the weak figures for March.

METI said production from manufacturers, the key component in the figure, is expected to dip 0.3 percent in April but rise by 3.4 percent in May.

The May recovery is backed largely by projections of increasing output in automotive and electronic device sectors.

Housing starts plummeted 19.4 percent to a 41-year low of 1.04 million in fiscal 2007 as tougher building regulations triggered the first drop in five years, the government said Wednesday.

Housing starts in the year to March 31 hit their lowest level on year since around 880,000 in fiscal 1966, according to data released by the Land, Infrastructure, Transport and Tourism Ministry.

Building regulations were toughened last July after architects were found to have fabricated earthquake-resistance data for hotels and condominiums.

The impact was felt most heavily in condominium starts, which fell 34.0 percent to 159,685 units — also the first drop in five years — as re-examination of building applications became mandatory.

In March alone, housing starts fell 15.6 percent to 83,991 units, down for the ninth consecutive month, with the rate of decline accelerating for the first time in six months.