Japan's industrial production unexpectedly slipped 0.1 percent on the month in February following an upwardly revised 6.7 percent plunge in January as the impact of suspended vehicle output over a safety test scandal lingered. The median forecast was a 1.0 percent gain. Of the 15 industries, 7 posted decreases from the previous month and 8 marked increases. The overall decline was led by the auto sector, which offset gains among chemical firms as well as pulp and paper makers.

From a year earlier, factory output posted a fourth straight drop, down 3.4 percent (versus consensus of a 2.8 percent decline), after a 1.5 percent dip the prior month. Output has also received downward pressures from the powerful New Year's Day earthquake in the northwestern region of Hokuriku, which reduced electronic parts supply.

The METI's survey of producers indicated that output is expected to rebound 4.5 percent in March and rise a further 3.3 percent in April.

The January slump was caused by suspension of all domestic production by Toyota Motor group firm Daihatsu over a vehicle safety scandal from late December until mid-February, which has had a widespread impact beyond the auto industry. Toyota also suspended shipments of 10 models in late January after its supplier Toyota Industries admitted to cheating on engine testing.

The ministry maintained its assessment after downgrading it for the first time in six months for the January data, saying industrial output"has weakened while taking one step forward and one step back."

The ministry maintained its assessment after downgrading it for the first time in six months for the January data, saying industrial output"has weakened while taking one step forward and one step back." METI said it will keep a close watch on the effects of global economic growth and resumed automobile production.

Econoday's Relative Performance Index stands at minus 18, below zero, which indicates the Japanese economy is performing largely as expected. Excluding the impact of inflation, the RPI is at minus 20.

Japan's industrial production is forecast to rise 1.0 percent on the month in February, recovering only a portion of an upwardly revised 6.7 percent plunge caused by suspended vehicle output over a safety test scandal. From a year earlier, factory output is expected to post a fourth straight drop, down 2.8 percent, after a 1.5 percent dip in the prior month. Output has also received downward pressures from the powerful New Year's Day earthquake in the northwestern region of Hokuriku, which has reduced electronic parts supply.

The METI's survey of producers indicated output is expected to rise 0.8 percent on the month in February and increase a further 2.0 percent in March. Toyota Motor group firm Daihatsu suspended all domestic production over a vehicle safety scandal from late December until mid-February, hurting production beyond the auto industry. Toyota also halted shipments of 10 models from late January after its supplier Toyota Industries admitted to cheating on engine testing.

Industrial Production measures the physical output of the nation's factories, mines and utilities. Factories manufacture various products, and the industrial production indexes have been prepared as a comprehensive indicator of wide-ranging production activities for such products and are regarded as some of the most important among economic indexes.

Investors want to keep their finger on the pulse of the economy because it usually dictates how various types of investments will perform. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers more subdued growth that won't lead to inflationary pressures. By tracking economic data such as industrial production, investors will know what the economic backdrop is for these markets and their portfolios.

Industrial production provides key industry data for this export-dependent economy. The data are issued twice a month-a preliminary estimate at the end of the month for the preceding month and a revised estimate about two weeks later. All products, whether sold domestically or abroad, are included in the calculation of industrial production. Industrial production is highly sensitive to the business cycle and can often predict future changes in employment, earnings and income. For these reasons industrial production is considered a reliable leading indicator that conveys information about the overall health of the economy. This report has a big influence on market behavior. In any given month, one can see whether capital goods or consumer goods are growing more rapidly. Are manufacturers still producing construction supplies and other materials? This detailed report shows which sectors of the economy are growing and which are not.