Japan's manufacturing sector showing modest growth: carmakers still struggling

Japan's manufacturing sector is beginning to recover from the March earthquake and tsunami, according to government figures, with factory output rising 1% in April compared to March. With this modest increase, production was down 14% from April 2010. Automakers, the hardest hit of Japanese manufacturers, have more ground to make up to recover.

Production at Toyota Motors' Japanese factories was down by 74.5 per cent in April compared to last year, while Honda reported a decline of 81 per cent. Nissan said its domestic production was off by 48.7 per cent for April.

Japan's exports of vehicles dropped 67.8 percent from a year earlier, the Japan Automobile Manufacturers Association said. Both the output and export drops were the biggest on record.

Production has been hampered by power shortages and by interruptions to the supply chain, as many car component manufacturers were severely damaged by the disaster in March. The government-owned Development Bank of Japan will set up a 50 billion yen ($617 million dollar) fund in June to support auto parts makers hit by the quake disaster.

Beyond Japan's borders, Toyota and Honda's global production has been reduced by half. In North America, Honda has said it will not return to full production until August. The popular Civic model is now at about 50 per cent of normal production and not expected to improve anytime soon. It was the third-best-selling car in the US in April, behind the Toyota Camry and Honda Accord.