The nation's annual industrial production and shipment indexes last year suffered their biggest declines in 23 years, with the production index down 6.9 percent from 1997 and the shipment index down 6.4 percent, according to a preliminary report released Thursday.
The annual production index dropped to 98.7 in 1998 against a 100-point benchmark set in 1995, and the shipment index fell to 100.2, the Ministry of International Trade and Industry said in the report.
In 1975, annual industrial output plummeted 11 percent and shipments 7.5 percent from the previous year, following the first oil crisis that erupted in 1973. "The historic decline of production and shipments last year was a result of a production slump in the first half," said Konosuke Ikeya, director of MITI's statistics analysis division. "Companies seemed to be concentrating on inventory adjustment throughout the year, but we must pay heed to such high-level inventory ratios as 107.8 (as of December)," Ikeya added.
The MITI official went on to say that final demand must be watched as a yardstick to determine future trends, as plant and equipment investment by the private sector remains sluggish and individual consumer demand remains stagnant.
The industrial production index logged its first monthly increase in three months in December, rising 1.3 percent due to increased public works-related activities and consumer demand for seasonal cosmetics and electronic games, according to the report.
The seasonally adjusted production index marked 97.2 in December based on the 1995 benchmark. "Inventory adjustment is making satisfactory progress, but production and shipments remain stagnant, with the inventory ratio remaining at a high level," the MITI official said.
The shipment index also posted its first increase in three months in December, rising 1.4 percent to 99.5. With the help of truck exports, inventory dropped 1.7 percent to 100.1, marking eight straight months of decline.