| Consensus | Consensus Range | Actual | Previous | Revised | |
|---|---|---|---|---|---|
| Month over Month | -1.0% | -3.0% to 0.8% | -1.6% | -0.4% | 0.7% |
| Year over Year | 5.0% | 3.3% to 11.1% | 4.7% | -0.3% | -0.7% |
Highlights
Japan's industrial production posted its first drop in four months in May as automobile output was hit by parts shortages again after a recent recovery on better supply chains while slower global demand for equipment and chemicals also dented overall factory output, preliminary data released Friday by the Ministry of Economy, Trade and Industry showed.
From a year earlier, factory output marked its first rise seven months.
The METI's survey of producers indicated that output is expected to mark a solid rebound in June before falling back slightly in July.
The ministry maintained its assessment after upgrading it April for the March data, saying industrial output"is showing signs of a gradual pickup." Previously, it had said, production"has weakened."
The METI repeated that it will keep a close watch on the effects of parts and materials supply shortages and rising prices. It has dropped its reference to the impact of a rise in Covid cases on domestic and global growth.
The Econoday Consensus Divergence Index stood at plus 11, above zero, which indicates the Japanese economy is performing slightly better than expected. Excluding the impact of inflation, the index was at plus 19.
Japanese policymakers believe the economy needs continued monetary and fiscal policy support to achieve sustainable wage growth and stable 2 percent inflation.
Industrial production fell a seasonally adjusted 1.6 percent on the month in May, coming in weaker than the median economist forecast of a 1.0 percent fall (forecasts ranged from a 3.0 percent drop percent to a 0.8 percent rise). It followed a 0.7 percent rise (revised up sharply from a 0.4 percent fall) in April, a 0.3 percent gain (revised down from a 1.1 percent rise) in March, a 3.7 percent rebound (revised down from a 4.6 percent jump) in February, a 3.9 percent dip (revised up from a 5.3 percent slump) in January and a 0.6 percent rise (revised up from a 0.3 percent increase) in December.
Of the 15 industries, 12 posted decreases from the previous month, led by the auto sector, and three, including makers of production equipment, recorded increases.
The METI changed the base year of the index of industrial production to 2020 from 2015, effective with revised April data, causing widespread revisions to recent figures.
Based on its survey of manufacturers, METI projected that industrial production would rebound 5.6 percent on the month in June (revised up from a 1.2 rise forecast last month) and slip 0.6 percent in July. Adjusting the upward bias in output plans, however, METI forecast production would rise a solid 3.4 percent in June.
From a year earlier, the production index rebounded 4.7 percent in May, marking the first increase in seven months after falling 0.7 percent (revised down from a 0.3 percent slip) in April. It was softer than the median economist forecast of a 5.0 percent rise (forecasts ranged from 3.3 percent to 11.1 percent gains).
Under the new base year, the index (100 = 2020) stood at 103.8 in May, down from a five-month high of 105.5 in April. It is well above the recent bottom of 87.6 hit in May 2020 but below 108.8 seen in January 2020, when the pandemic hadn't had a widespread impact yet. The index briefly jumped to 108.8 in April 2021, 109.0 in June 2021 and 107.8 in August 2022.
From a year earlier, factory output marked its first rise seven months.
The METI's survey of producers indicated that output is expected to mark a solid rebound in June before falling back slightly in July.
The ministry maintained its assessment after upgrading it April for the March data, saying industrial output"is showing signs of a gradual pickup." Previously, it had said, production"has weakened."
The METI repeated that it will keep a close watch on the effects of parts and materials supply shortages and rising prices. It has dropped its reference to the impact of a rise in Covid cases on domestic and global growth.
The Econoday Consensus Divergence Index stood at plus 11, above zero, which indicates the Japanese economy is performing slightly better than expected. Excluding the impact of inflation, the index was at plus 19.
Japanese policymakers believe the economy needs continued monetary and fiscal policy support to achieve sustainable wage growth and stable 2 percent inflation.
Industrial production fell a seasonally adjusted 1.6 percent on the month in May, coming in weaker than the median economist forecast of a 1.0 percent fall (forecasts ranged from a 3.0 percent drop percent to a 0.8 percent rise). It followed a 0.7 percent rise (revised up sharply from a 0.4 percent fall) in April, a 0.3 percent gain (revised down from a 1.1 percent rise) in March, a 3.7 percent rebound (revised down from a 4.6 percent jump) in February, a 3.9 percent dip (revised up from a 5.3 percent slump) in January and a 0.6 percent rise (revised up from a 0.3 percent increase) in December.
Of the 15 industries, 12 posted decreases from the previous month, led by the auto sector, and three, including makers of production equipment, recorded increases.
The METI changed the base year of the index of industrial production to 2020 from 2015, effective with revised April data, causing widespread revisions to recent figures.
Based on its survey of manufacturers, METI projected that industrial production would rebound 5.6 percent on the month in June (revised up from a 1.2 rise forecast last month) and slip 0.6 percent in July. Adjusting the upward bias in output plans, however, METI forecast production would rise a solid 3.4 percent in June.
From a year earlier, the production index rebounded 4.7 percent in May, marking the first increase in seven months after falling 0.7 percent (revised down from a 0.3 percent slip) in April. It was softer than the median economist forecast of a 5.0 percent rise (forecasts ranged from 3.3 percent to 11.1 percent gains).
Under the new base year, the index (100 = 2020) stood at 103.8 in May, down from a five-month high of 105.5 in April. It is well above the recent bottom of 87.6 hit in May 2020 but below 108.8 seen in January 2020, when the pandemic hadn't had a widespread impact yet. The index briefly jumped to 108.8 in April 2021, 109.0 in June 2021 and 107.8 in August 2022.
Market Consensus Before Announcement
Japan's industrial production is expected to have posted its first drop in four months in May, down 1.0 percent on the month after a revised 0.7 percent gain in April, reflecting slower global demand for equipment and semiconductors and despite solid automobile output amid improving supply chains.
The Ministry of Economy, Trade and Industry has updated the base year of the industrial production index to 2020 from 2015, effective with revised April data, causing widespread revisions to recent figures.
From a year earlier, factory output is seen up 5.0 percent for the first rise seven months after a revised 0.7 percent drop in April.
The Ministry of Economy, Trade and Industry has updated the base year of the industrial production index to 2020 from 2015, effective with revised April data, causing widespread revisions to recent figures.
From a year earlier, factory output is seen up 5.0 percent for the first rise seven months after a revised 0.7 percent drop in April.
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.
