JP: Industrial Production

Wed Oct 28 18:50:00 CDT 2015

Consensus Actual Previous
Month over Month -0.5% 1.0% -0.5%
Year over Year -0.8% 0.3%

September industrial production advanced for the first time in three months. Output was up 1.0 percent on the month but down 0.8 percent from a year ago. Chemicals except drugs were up 5.4 percent, electronic parts & devices was up 6.0 percent on the month and electrical machinery also added 5.4 percent.

Production is expected to increase 4.1 percent in October with gains in general-purpose, production & business oriented machinery, transport equipment and electrical machinery.

The unexpected strength could help keep the Japanese economy out of a recession in the third quarter. Either way, it adds to the case for holding policy steady when the BoJ meets Friday.

Industrial production measures the physical output of the nation's factories, mines and utilities.

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.