JP: Industrial Production

Wed Apr 27 18:50:00 CDT 2016

Consensus Actual Previous
Month over Month 2.9% 3.6% -6.2%
Year over Year -1.6% -5.4%

March industrial production jumped 3.6 percent on the month after sinking 5.2 percent in February. The increase was the most in nearly five years. From a year ago, output was down 1.6 percent. The industries that mainly contributed to the increase were transport equipment, general purpose, production & business oriented machinery and fabricated metals.

According to METI's survey of production forecast in manufacturing, production is expected to increase 2.6 percent in April and decrease 2.3 percent in May.

However, the earthquake that struck the southern Japanese island of Kyushu in April is likely to weigh on industrial production, and more broadly upon GDP growth for the whole June quarter, particularly if any supply chain disruptions aren't mended quickly.

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.