|Month over Month||-6.0%||-6.2%||3.7%|
|Year over Year||-5.4%||-2.3%|
February industrial production tumbled a seasonally adjusted 6.2 percent on the month and 5.4 percent from a year ago. This was the largest drop since the 2011 tsunami when output contracted 16.5 percent. The annual change on the original index was a decline of 1.5 percent. This is in contrast to the monthly jump of 3.7 percent in January. Transport equipment tumbled 10.2 percent on the month, electronic parts & devices were down 14.7 percent and general-purpose, production & business oriented machinery slid 7.3 percent.
According to the government forecast for the next two months, March output is expected to increase 3.9 percent and in April, 5.3 percent.
The Bank of Japan, in its recent monetary policy statements, has described industrial production as having "continued to be more or less flat", but has also said that "sluggishness" in the outlook for exports and production is likely to remain.
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.
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