Japan's industrial production dropped a seasonally adjusted 2.7 percent in April from the previous month, marking the first decline in three months, the Ministry of International Trade and Industry said in a preliminary report released Friday.

The April index of industrial production stood at 96.9 against the 1995 benchmark of 100.

The ministry officials characterized the monthly drop as a reaction from substantially boosted production in March, as many manufacturers tried to get results before closing their books for fiscal 1998.

The level of output relapsed especially in rolling stock, automobiles, personal computers and mobile phones, according to the report.

The shipment index also slipped 4.3 percent from the previous month to 97.1, marking the first decline in two months and the lowest figure since July 1995.

The inventory index has continued to contract for two consecutive months to 97.0, the lowest figure since December 1994.

The ministry expects a rebound in industrial production in May and June, pointing to favorable prospects for PCs, mobile phones, trucks and cars, TV games as well as general machinery and housing-related fabricated metals.

However, the nation's production is still in the process of bottoming out, they said. "The supply side has prepared conditions for production to pick up, but we need to closely watch uncertain trends in final demand (in determining whether it hits bottom)," a MITI official said.

While the April shipment decline was attributed to articles such as rolling stock, PCs and general industrial machine equipment, items such as automobiles, minicars and trucks contributed to the shrink in inventory.

Meanwhile, the April ratio of inventories to shipments was up by 1.5 percent at 105.6.