| Consensus | Consensus Range | Actual | Previous | Revised | |
|---|---|---|---|---|---|
| Month over Month | 2.5% | 1.2% to 3.4% | 0.2% | 0.0% | -0.7% |
| Year over Year | -2.6% | -3.6% to -2.3% | -4.6% | -3.8% | -4.4% |
Highlights
Japan's industrial production posted its first rise in three months in September but at a much weaker-than-expected pace of 0.2 percent, as output of automobiles returned to normal after a temporary shutdown at Toyota Motor's domestic factories in late August, preliminary data released Tuesday by the Ministry of Economy, Trade and Industry showed.
Slowing global demand took its toll on the July-September output, which gave up nearly all the gain in April-June. From a year earlier, factory output marked the third consecutive fall, down 4.6 percent, which was worse than expected.
The METI's survey of producers indicated that output is expected to post a modest gain in October before falling back in November.
The ministry maintained its assessment after downgrading it for the first time in eight months in August for the July data, saying industrial output is"taking one step forward and one step back."
The METI said it will keep a close watch on the effects of downside risks to global economic growth and a rise in prices.
Econoday's Relative Performance Index stood at plus 18, above zero, which indicates the Japanese economy is performing better than expected after outperforming with a wider margin earlier. Excluding the impact of inflation, the RPI was at plus 6.
Japanese policymakers believe the economy needs continued monetary and fiscal policy support to achieve sustainable wage growth and stable 2 percent inflation.
Industrial production inched up 0.2 percent on the month in September on a seasonally adjusted basis, coming in much weaker than the median economist forecast of a 2.5 percent rise (forecasts ranged from 1.2 percent to 3.4 percent gains). It followed a 0.7 percent drop (revised down from being flat) in August, a 1.8 percent fall in July, a 2.4 percent rise in June and a 2.2 percent slump in May.
Of the 15 industries, nine posted increases from the previous month and six. marked decreases. The increase was led by higher output of passenger cars and auto parts as well as general machinery and cement. Lower production was seen in production machinery (industrial robots, etc.) and electrical and information technology equipment (ultrasound and x-ray devices).
Production fell a seasonally adjusted 1.3 percent on quarter in the July-September period after rising 1.4 percent in April-June, falling 1.8 percent in January-March and slipping 1.7 percent in October-December. The median economist forecast was a 0.6 percent drop.
Based on its survey of manufacturers, METI projected that industrial production would rise 3.9 percent on the month in October (revised up slightly from a 3.8 percent rise forecast last month) and fall 2.8 percent in November. Adjusting the upward bias in output plans, however, METI forecast production would still rise 1.1 percent in October.
From a year earlier, the production index slipped 4.6 percent in September after falling a revised 4.4 percent in August, dipping 2.3 percent in July and being flat in June. The decrease was much larger than the median economist forecast of a 2.6 percent fall (forecasts ranged from 3.6 percent to 2.3 percent drops).
Shipments of capital goods excluding transport equipment -- a key indicator of business investment in equipment in GDP data -- fell 4.2 percent on quarter in July-September after rebounding 3.8 percent in April-June, slumping 6.5 percent in January-March, falling 5.1 percent in October-December. Capital investment may remain sluggish in the preliminary July-September GDP data due on Nov. 15, which is expected to show the economy contracted slightly after strong gains in the previous two quarters.
The index of industrial production (100 = 2020) stood at 103.3 in September, up from a revised 103.1 in August. 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.
Slowing global demand took its toll on the July-September output, which gave up nearly all the gain in April-June. From a year earlier, factory output marked the third consecutive fall, down 4.6 percent, which was worse than expected.
The METI's survey of producers indicated that output is expected to post a modest gain in October before falling back in November.
The ministry maintained its assessment after downgrading it for the first time in eight months in August for the July data, saying industrial output is"taking one step forward and one step back."
The METI said it will keep a close watch on the effects of downside risks to global economic growth and a rise in prices.
Econoday's Relative Performance Index stood at plus 18, above zero, which indicates the Japanese economy is performing better than expected after outperforming with a wider margin earlier. Excluding the impact of inflation, the RPI was at plus 6.
Japanese policymakers believe the economy needs continued monetary and fiscal policy support to achieve sustainable wage growth and stable 2 percent inflation.
Industrial production inched up 0.2 percent on the month in September on a seasonally adjusted basis, coming in much weaker than the median economist forecast of a 2.5 percent rise (forecasts ranged from 1.2 percent to 3.4 percent gains). It followed a 0.7 percent drop (revised down from being flat) in August, a 1.8 percent fall in July, a 2.4 percent rise in June and a 2.2 percent slump in May.
Of the 15 industries, nine posted increases from the previous month and six. marked decreases. The increase was led by higher output of passenger cars and auto parts as well as general machinery and cement. Lower production was seen in production machinery (industrial robots, etc.) and electrical and information technology equipment (ultrasound and x-ray devices).
Production fell a seasonally adjusted 1.3 percent on quarter in the July-September period after rising 1.4 percent in April-June, falling 1.8 percent in January-March and slipping 1.7 percent in October-December. The median economist forecast was a 0.6 percent drop.
Based on its survey of manufacturers, METI projected that industrial production would rise 3.9 percent on the month in October (revised up slightly from a 3.8 percent rise forecast last month) and fall 2.8 percent in November. Adjusting the upward bias in output plans, however, METI forecast production would still rise 1.1 percent in October.
From a year earlier, the production index slipped 4.6 percent in September after falling a revised 4.4 percent in August, dipping 2.3 percent in July and being flat in June. The decrease was much larger than the median economist forecast of a 2.6 percent fall (forecasts ranged from 3.6 percent to 2.3 percent drops).
Shipments of capital goods excluding transport equipment -- a key indicator of business investment in equipment in GDP data -- fell 4.2 percent on quarter in July-September after rebounding 3.8 percent in April-June, slumping 6.5 percent in January-March, falling 5.1 percent in October-December. Capital investment may remain sluggish in the preliminary July-September GDP data due on Nov. 15, which is expected to show the economy contracted slightly after strong gains in the previous two quarters.
The index of industrial production (100 = 2020) stood at 103.3 in September, up from a revised 103.1 in August. 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 post its first rise in three months in September, up 2.5 percent, after falling a revised 0.7 percent in August and slumping 1.8 percent in July. Output of automobiles returned to normal after a temporary shutdown at Toyota Motor's domestic factories on Aug. 29. Even with a rebound in September, production in the third quarter is forecast to record a slight 0.6 percent drop from April-June, when it rose 1.4 percent for the first rise in three quarters. Global demand for semiconductor-producing equipment remains soft. From a year earlier, factory output is seen marking a third consecutive fall, down 2.6 percent, following a revised 4.4 percent drop in August.
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.
