| Consensus | Consensus Range | Actual | Previous | Revised | |
|---|---|---|---|---|---|
| Month over Month | -1.4% | -2.9% to -0.5% | -2.0% | 2.0% | 2.4% |
| Year over Year | -1.9% | -2.3% to -1.1% | -2.5% | -0.4% | 0.0% |
Highlights
Japan's industrial production slipped back on the month in July after rebounding in June, hit by lower global and domestic demand for semiconductor-producing equipment and despite continued recovery in supply chains for the auto industry, preliminary data released Thursday by the Ministry of Economy, Trade and Industry showed.
From a year earlier, factory output marked the first drop in three months.
The METI's survey of producers indicated that output is expected to dip further in August before posting a modest rebound in September.
The ministry downgraded its assessment for the first time in eight months after upgrading it April for the March data, saying industrial output is"making one step forward and one step back." It is a setback form the previous statement that output was"showing signs of a gradual pickup."
METI said it will keep a close watch on the effects of downside risks to global economic growth and a rise in prices; it warned about the drag from high interest rates in major economies, except for Japan, and about China's slow recovery from its pandemic slump. The agency removed the effects of materials supply shortages from its watch list.
The Econoday Consensus Divergence Index stood at minus 28, below zero which indicates the Japanese economy is performing worse than expected after underperforming with a smaller margin earlier. Excluding the impact of inflation, the index was at minus 34.
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 2.0 percent on the month in July, coming in weaker than the median economist forecast of a 1.4 percent fall (forecasts ranged from 2.9 percent to 0.5 percent drops). It followed a 2.4 percent rise (revised up from 2.0 percent) in June, a 2.2 percent drop in May, a 0.7 percent rise in April, a 0.3 percent gain in March, a 3.7 percent rebound in February and a 3.9 percent dip in January.
Of the 15 industries, 10 posted decreases from the previous month and five marked increases.
Based on its survey of manufacturers, METI projected that industrial production would rise 2.6 percent on the month in August (revised up from a 1.1 percent rise forecast last month) and gain 2.4 percent in September. Adjusting the upward bias in output plans, however, METI forecast production would fall 1.4 percent in August.
From a year earlier, the production index slumped 2.5 percent in July after being flat (revised up from a 0.4 percent drop) in June and rising 4.2 percent in May, which was the first increase in seven months. It was weaker than the median economist forecast of a 1.9 percent fall (forecasts ranged from 2.3 percent to 1.1 percent drops).
The index of industrial production (100 = 2020) stood at 103.6 in July, down from a revised 105.7 in June. 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 the first drop in three months.
The METI's survey of producers indicated that output is expected to dip further in August before posting a modest rebound in September.
The ministry downgraded its assessment for the first time in eight months after upgrading it April for the March data, saying industrial output is"making one step forward and one step back." It is a setback form the previous statement that output was"showing signs of a gradual pickup."
METI said it will keep a close watch on the effects of downside risks to global economic growth and a rise in prices; it warned about the drag from high interest rates in major economies, except for Japan, and about China's slow recovery from its pandemic slump. The agency removed the effects of materials supply shortages from its watch list.
The Econoday Consensus Divergence Index stood at minus 28, below zero which indicates the Japanese economy is performing worse than expected after underperforming with a smaller margin earlier. Excluding the impact of inflation, the index was at minus 34.
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 2.0 percent on the month in July, coming in weaker than the median economist forecast of a 1.4 percent fall (forecasts ranged from 2.9 percent to 0.5 percent drops). It followed a 2.4 percent rise (revised up from 2.0 percent) in June, a 2.2 percent drop in May, a 0.7 percent rise in April, a 0.3 percent gain in March, a 3.7 percent rebound in February and a 3.9 percent dip in January.
Of the 15 industries, 10 posted decreases from the previous month and five marked increases.
Based on its survey of manufacturers, METI projected that industrial production would rise 2.6 percent on the month in August (revised up from a 1.1 percent rise forecast last month) and gain 2.4 percent in September. Adjusting the upward bias in output plans, however, METI forecast production would fall 1.4 percent in August.
From a year earlier, the production index slumped 2.5 percent in July after being flat (revised up from a 0.4 percent drop) in June and rising 4.2 percent in May, which was the first increase in seven months. It was weaker than the median economist forecast of a 1.9 percent fall (forecasts ranged from 2.3 percent to 1.1 percent drops).
The index of industrial production (100 = 2020) stood at 103.6 in July, down from a revised 105.7 in June. 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 forecast to have dipped 1.4 percent on the month in July after rebounding an upwardly revised 2.4 percent in June, hit by lower demand for semiconductors and despite the recent improvement in supply chains for the auto industry. From a year earlier, output is seen down 1.9 percent for the first drop in three months after being flat in June.
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.
