| Consensus | Consensus Range | Actual | Previous | Revised | |
|---|---|---|---|---|---|
| Month over Month | -3.0% | -4.2% to -1.3% | -4.6% | -0.1% | 0.3% |
| Year over Year | -0.4% | -1.4% to 1.0% | -2.3% | -2.8% | -2.4% |
Highlights
Japan's industrial production slumped at a faster pace than expected in January for the first drop in three months after December's upwardly revised slight gain,
as automakers suffered parts shortages and many other industries were hit by weaker global and domestic demand, preliminary data released Tuesday by the Ministry of Economy, Trade and Industry showed.
The decline in output reflects weaker exports in January on slowing global demand and suspended shipments during the lunar new year holidays in some parts of Asia. The Bank of Japan's real export index fell a seasonally adjusted 2.9 percent on the month in January for the second straight decline after slipping 4.5 percent in December.
The METI's survey of producers indicated that output is likely to post modest gains in February and March, but the ministry said that would not be strong enough to offset the sharp drop in January.
The ministry maintained its view after downgrading it recently, saying industrial output"has weakened." Previously, it had said, production was"picking up gradually but also showing weakness in some areas." The METI repeated that it will keep a close watch on the impact of a rise in Covid cases on domestic and global growth as well as parts and materials supply shortages and rising prices.
The Econoday Consensus Divergence Index stood at minus 24, below zero, which indicates the Japanese economy is performing worse than expected after outperforming earlier. Excluding the impact of inflation, the index was at minus 20.
Japanese policymakers have said the economy needs continued monetary and fiscal policy support to achieve sustainable wage growth and stable 2 percent inflation.
Industrial production slumped a seasonally adjusted 4.6 percent on the month in January, coming in much weaker than the median economist forecast of a 3.0 percent fall (forecasts ranged from 4.2 percent to 1.3 percent drops). It followed a 0.3 percent rise (revised up from an initial 0.1 percent dip), a 0.2 percent rebound in November and a 3.2 percent slump in October. The 9.2 percent surge in June 2022 was due to the reopening of Shanghai after two months of a Covid lockdown of the port city, which supported the regional supply chain.
Of the 15 industries, 12 posted decreases and three recorded increases from the previous month. Leading the decline were autos (passenger cars, engines) amid parts supply shortages. Output of production machinery also fell as makers of semiconductor-producing equipment faced slower global and domestic demand and parts shortages hit production of excavators.
Based on its survey of manufacturers, METI projected that industrial production would rise 8.0 percent on the month in February (revised up from a 4.1 percent rise forecast last month) and edge up 0.7 percent in March. Adjusting the upward bias in output plans, however, METI forecast production would rise a modest 1.3 percent in February.
The index of industrial production (100 in the 2015 base year) stood at 91.4 in January, falling to an eight-month low. It is above the recent bottom of 77.2 hit in May 2020 but below 99.1 seen in January 2020, when the pandemic hadn't had a widespread impact yet. The index briefly jumped to 100.2 in August this year.
Production fell during the first wave of the pandemic in 2020. After a pickup later that year, more waves of infections caused logistical bottlenecks amid reopening demand and prompted parts supply delays from Southeast Asia, where lockdowns hit factory operations in August 2021. Later, easing supply bottlenecks pushed up production from October to December 2021. Output was flat in calendar 2022, down 0.1%, after rising 5.6% in 2021 and plunging 10.4% in 2020.
From a year earlier, the production index slipped 2.3 percent in January, marking the third straight drop after sliding 2.4 percent (revised up from a 2.8 percent drop) in December, falling 0.9 percent in November and rising 3.0 percent in October. It was weaker than the median economist forecast of a 0.4 percent fall (forecasts ranged from a 1.4 percent drop to a 1.0 percent gain). Production showed double-digit percentage gains on year from April to July 2021 in reaction to the pandemic-caused slump the previous year.
as automakers suffered parts shortages and many other industries were hit by weaker global and domestic demand, preliminary data released Tuesday by the Ministry of Economy, Trade and Industry showed.
The decline in output reflects weaker exports in January on slowing global demand and suspended shipments during the lunar new year holidays in some parts of Asia. The Bank of Japan's real export index fell a seasonally adjusted 2.9 percent on the month in January for the second straight decline after slipping 4.5 percent in December.
The METI's survey of producers indicated that output is likely to post modest gains in February and March, but the ministry said that would not be strong enough to offset the sharp drop in January.
The ministry maintained its view after downgrading it recently, saying industrial output"has weakened." Previously, it had said, production was"picking up gradually but also showing weakness in some areas." The METI repeated that it will keep a close watch on the impact of a rise in Covid cases on domestic and global growth as well as parts and materials supply shortages and rising prices.
The Econoday Consensus Divergence Index stood at minus 24, below zero, which indicates the Japanese economy is performing worse than expected after outperforming earlier. Excluding the impact of inflation, the index was at minus 20.
Japanese policymakers have said the economy needs continued monetary and fiscal policy support to achieve sustainable wage growth and stable 2 percent inflation.
Industrial production slumped a seasonally adjusted 4.6 percent on the month in January, coming in much weaker than the median economist forecast of a 3.0 percent fall (forecasts ranged from 4.2 percent to 1.3 percent drops). It followed a 0.3 percent rise (revised up from an initial 0.1 percent dip), a 0.2 percent rebound in November and a 3.2 percent slump in October. The 9.2 percent surge in June 2022 was due to the reopening of Shanghai after two months of a Covid lockdown of the port city, which supported the regional supply chain.
Of the 15 industries, 12 posted decreases and three recorded increases from the previous month. Leading the decline were autos (passenger cars, engines) amid parts supply shortages. Output of production machinery also fell as makers of semiconductor-producing equipment faced slower global and domestic demand and parts shortages hit production of excavators.
Based on its survey of manufacturers, METI projected that industrial production would rise 8.0 percent on the month in February (revised up from a 4.1 percent rise forecast last month) and edge up 0.7 percent in March. Adjusting the upward bias in output plans, however, METI forecast production would rise a modest 1.3 percent in February.
The index of industrial production (100 in the 2015 base year) stood at 91.4 in January, falling to an eight-month low. It is above the recent bottom of 77.2 hit in May 2020 but below 99.1 seen in January 2020, when the pandemic hadn't had a widespread impact yet. The index briefly jumped to 100.2 in August this year.
Production fell during the first wave of the pandemic in 2020. After a pickup later that year, more waves of infections caused logistical bottlenecks amid reopening demand and prompted parts supply delays from Southeast Asia, where lockdowns hit factory operations in August 2021. Later, easing supply bottlenecks pushed up production from October to December 2021. Output was flat in calendar 2022, down 0.1%, after rising 5.6% in 2021 and plunging 10.4% in 2020.
From a year earlier, the production index slipped 2.3 percent in January, marking the third straight drop after sliding 2.4 percent (revised up from a 2.8 percent drop) in December, falling 0.9 percent in November and rising 3.0 percent in October. It was weaker than the median economist forecast of a 0.4 percent fall (forecasts ranged from a 1.4 percent drop to a 1.0 percent gain). Production showed double-digit percentage gains on year from April to July 2021 in reaction to the pandemic-caused slump the previous year.
Market Consensus Before Announcement
Japan's industrial production is forecast to post its first drop in three months in January, down 3.0 percent on the month, after December's upwardly revised slight gain, in tandem with slowing global growth caused by cumulative effects of credit tightening by major central banks aimed at bringing elevated inflation back to target.
The slump in output reflects weaker exports in January on slowing global demand and suspended shipments during the Lunar New Year holidays in some parts of Asia. The Bank of Japan's real export index fell a seasonally adjusted 2.9 percent on the month in January for the second straight decline after slipping 4.5 percent in December.
The slump in output reflects weaker exports in January on slowing global demand and suspended shipments during the Lunar New Year holidays in some parts of Asia. The Bank of Japan's real export index fell a seasonally adjusted 2.9 percent on the month in January for the second straight decline after slipping 4.5 percent in December.
Definition
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.
Description
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.
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.
