Japan's output maintains steady growth

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Japan's manufacturers have increased their output for the third successive quarter in the early months of 2000 - the first time that industrial production has expanded so steadily for three years.

Japan's manufacturers have increased their output for the third successive quarter in the early months of 2000 - the first time that industrial production has expanded so steadily for three years.

Official figures yesterday showed a 2.8 per cent increase in output in January-March, in the latest evidence that the country's economic recovery is becoming less tentative.

Production fell by 1 per cent between February and March owing to the timing of factory operations. But it was 4.7 per cent higher than the previous March, reaching its highest level since late 1997.

There were particularly strong gains in semiconductors, mobile phones, chemicals and cars. Output of capital goods rose by an impressive 9.3 per cent during the quarter, while output of consumer durables also increased.

Economists said production was likely to continue growing, although perhaps at a slower pace. "The second quarter outlook is for some slowdown, but more than anything this should be interpreted as a return to a more sustainable rate of growth," said James Malcolm, an economist at JP Morgan.

The recent Tankan business survey showed that big manufacturers plan to boost investment in the next quarter for the first time in more than three years.

However, Japan is not out of the recessionary woods just yet. The central bank yesterday opted to continue its policy of holding interest rates at zero because of signs that consumer spending is still falling.

The corporate restructuring that is boosting output has undermined consumer confidence by sending unemployment up to post-war records.

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