Japan economic data sparks recession fears

Updated 11 December 2012
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Japan economic data sparks recession fears

TOKYO: Japan confirmed yesterday the world's third-largest economy shrank in the three months to September, stoking fears the country was slipping into a recession and fueling speculation about fresh easing measures.
Financial turmoil in Europe, an export-denting strong yen and a diplomatic row with major trade partner China have hurt Japan's economy, dousing hopes it had cemented a recovery after last year's quake-tsunami disaster.
Yesterday, data from the Cabinet Office confirmed earlier figures that showed Japan's economy shrank 0.9 percent in the July-September quarter, or down 3.5 percent on an annualized basis.
The revised data also showed growth in the previous quarter was essentially flat, slipping 0.03 percent, reversing preliminary figures which had pointed to 0.1 percent growth in the April to June quarter.
That would meet the technical definition of a recession — two successive quarters of negative growth — but the government, the official arbiter of such matters, urged caution on interpreting the figures.
The data was likely, however, to heap pressure on the Bank of Japan for more aggressive policy action to stem a slowdown in the Japanese economy.
"We had already said Japan was in a recession. Today's number strengthened our case," said Tomo Kinoshita, chief economist at Nomura Securities in Tokyo.
Separate data released yesterday showed Japan's current account surplus was down about 30 percent on-year to 376.9 billion yen ($ 4.56 billion) in October, although the latest figure beat market expectations for a 218 billion yen surplus, according to Dow Jones Newswires.
The current account is the broadest measure of Japan's trade with the rest of the world, including exports, tourism and overseas income.
Japan's current account surpluses have been hit by a slowing global economy and a spike in fuel imports due to the shutdown of most of the country's nuclear reactors following the 2011 quake-and-tsunami sparked nuclear crisis.
To make matters worse, the flare-up in a decades-long row over a disputed island chain has sparked a consumer boycott of Japanese products in China, damaging a more than $ 340-billion annual trade relationship with Beijing.
Last month, Tokyo approved $ 10.7 billion in fresh spending to help boost the limp economy, more than double a package announced in October.
The new package was an-nounced as the nation prepares for Dec. 16 elections which are expected to see Prime Minister Yoshihiko Noda and his Democratic Party of Japan defeated by the main opposition Liberal Democratic Party led by Shinzo Abe.
Abe has vowed to spend heavily on public works and pressure the Bank of Japan into launching aggressive monetary easing measures to boost growth if his party wins the election.
The BoJ has unveiled policy easing measures in recent months as its counterparts in the US and Europe launched major moves to counter slowing growth.
The yen has been weakening as speculation grows that the BoJ will usher in further easing measures after its policy meeting this month, with the central bank's closely-watched Tankan corporate sentiment survey due this week.
"The BoJ will have no choice but to consider additional monetary easing in case its own Tankan survey shows worsening in near-term corporate sentiment," said RBS Securities chief Japan economist Junko Nishioka.


Southwest challenged engine maker over speed of safety checks

Updated 20 April 2018
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Southwest challenged engine maker over speed of safety checks

  • The proposed inspections would have cost $170 per engine for two hours of labor
  • Southwest Airlines Chairman and CEO Gary Kelly explained the airline’s maintenance procedures in a 59-second video posted to Twitter

WASHINGTON/PARIS: Southwest Airlines clashed with engine-maker CFM over the timing and cost of proposed inspections after a 2016 engine accident, months before the explosion this week of a similar engine on a Southwest jet that led to the death of a passenger, public documents showed.
The proposed inspections would have cost $170 per engine for two hours of labor, for a total bill to US carriers of $37,400, the US Federal Aviation Administration said in its August 2017 proposal, citing the engine manufacturer.
The documents reveal that airlines including Southwest thought the FAA had “vastly understated” the number of engines that would need to be inspected — and therefore the cost.
The documents are part of the public record on the FAA’s initial proposal for inspections and the response from airlines made in October, within the designated comment period.
The FAA and CFM International made the inspection recommendations after a Southwest flight in August 2016 made a safe emergency landing in Florida after a fan blade separated from the same type of engine. Debris ripped a foot-long hole above the left wing. Investigators found signs of metal fatigue.
On Tuesday, a broken fan blade touched off an engine explosion on Southwest Airlines flight 1380, shattering a window of the Boeing 737 jet and killing a passenger. It was the first death in US airline service since 2009.
The FAA is not bound by any specified time periods in deciding whether to order inspections and must assess the urgency of each situation.
Southwest and other airlines in their responses in October objected to a call by CFM to complete all inspections within 12 months. The FAA proposed up to 18 months, backed by Southwest and most carriers. Southwest also told the FAA that only certain fan blades should be inspected, not all 24 in each engine.
“SWA does NOT support the CFM comment on reducing compliance time to 12 months,” Southwest wrote in an October submission.
CFM is a joint venture of General Electric Co. and France’s Safran.
Southwest said in its submission that the FAA’s proposal would force the carrier to inspect some 732 engines in one of two categories under review — much higher than the FAA’s total estimate of 220 engines across the whole US fleet.
“The affected engine count for the fleet in costs of compliance ... appears to be vastly understated,” it said.
Southwest spokeswoman Brandy King said on Thursday that the comments “were to add further clarification on items included in the proposed AD (airworthiness directive).”
She said the company had satisfied CFM’s recommendations, but she did not immediately answer questions about how many engines had been inspected and whether the failed engine had been inspected.
Late on Thursday, Southwest Airlines Chairman and CEO Gary Kelly explained the airline’s maintenance procedures in a 59-second video posted to Twitter. He said the airline hires GE to do heavy overhaul or maintenance work on all of its engines.
“So GE provides the guidelines for maintenance inspections and repairs over the life of the engines,” he said.


The airline on Tuesday evening said it would conduct accelerated ultrasonic inspections of the fan blades on CFM56 engines within the next 30 days.
“In addition to our accelerated inspections we are meeting with GE and Boeing on a daily basis regarding the progress of the inspections and we will continue to work with them throughout the rest of the investigation,” Kelly said in the video.
The FAA said on Wednesday it would finalize the airworthiness directive it had proposed in August within two weeks. It will require inspections of some CFM56-7B engines. FAA officials acknowledged that the total number of engines affected could be higher than first estimated.
The FAA, which has issued more than 100 airworthiness directives just since the beginning of this year, has said that the time it takes to finalize directives depends on the complexity of the issue and the agency’s risk assessment based on the likelihood of occurrence and the severity of the outcome.
The National Transportation Safety Board said on Thursday that investigators would be on the scene into the weekend but declined any new comment on the investigation.
Investigators said one of the fan blades on Tuesday’s Southwest flight broke and fatigue cracks were found.