| Consensus | Consensus Range | Actual | Previous | Revised | |
|---|---|---|---|---|---|
| Month over Month | 0.5% | -1.5% to 1.6% | 1.0% | 0.2% | 0.5% |
| Year over Year | 0.2% | -1.3% to 1.5% | 0.9% | -4.6% | -4.4% |
Highlights
Japan's industrial production made a solid start to the final quarter of 2023, posting its second straight rise on the month in October, up an above-forecast 1.0 percent, as output of electronic parts and devices rebounded after a recent slip and demand for automobiles remains strong on improved supply chains, preliminary data released Thursday by the Ministry of Economy, Trade and Industry showed.
Production weathered the impact of a temporary shutdown at some of Toyota Motor's domestic factories caused by an accident at a supplier's facility. The data also reflects the general assessment that the global semiconductor market has hit a bottom.
From a year earlier, factory output marked its first rise in five months, up 0.9 percent, reversing only a small portion of recent drops including a 4.4 percent decline in each of September and August.
The METI's survey of producers indicated that output is expected to fall in November, giving up all of the gains made in the previous two months, before rebounding in December.
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 repeated its recent statement that 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 minus 18, below zero, which indicates the Japanese economy is performing worse than expected. Excluding the impact of inflation, the RPI was at zero.
Japanese policymakers believe the economy needs continued monetary and fiscal policy support to achieve sustainable wage growth and stable 2 percent inflation. The economy posted its first contraction in three quarters in July-September, likely pushing the output gap back into negative territory.
Industrial production rose 1.0 percent on the month in October on a seasonally adjusted basis, coming in stronger than the median economist forecast of a 0.5 percent rise (forecasts ranged from a 1.5 percent drop to a 1.6 percent gain). It followed a 0.5 percent rise (revised up from a 0.2 percent gain) in September, a 0.7 percent drop 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, 10 posted increases from the previous month and five marked decreases. The increase was led by higher output of electronic parts and devices after a recent decline. Passenger cars and trucks also contributed to the overall production rise, reflecting strong sales of those vehicles. Lower production was seen in the category of iron/steel and non-ferrous metals as well as oil refineries.
Based on its survey of manufacturers, METI projected that industrial production would dip 0.3 percent on the month in November (revised up from a 2.8 percent drop forecast last month) and rebound 3.2 percent in December. Adjusting the upward bias in output plans, METI forecast production would fall a sharper 1.9 percent in November.
From a year earlier, the production index rebounded 0.9 percent in October after falling 4.4 percent each in September and August, dipping 2.3 percent in July, being flat in June and rising 4.2 percent in May. The increase was much larger than the median economist forecast of a 0.2 percent rise (forecasts ranged from a 1.3 percent drop to a 1.5 percent rise).
The index of industrial production (100 = 2020) stood at a four-month high of 104.6 in October, up from a revised 103.6 in September. 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.
Production weathered the impact of a temporary shutdown at some of Toyota Motor's domestic factories caused by an accident at a supplier's facility. The data also reflects the general assessment that the global semiconductor market has hit a bottom.
From a year earlier, factory output marked its first rise in five months, up 0.9 percent, reversing only a small portion of recent drops including a 4.4 percent decline in each of September and August.
The METI's survey of producers indicated that output is expected to fall in November, giving up all of the gains made in the previous two months, before rebounding in December.
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 repeated its recent statement that 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 minus 18, below zero, which indicates the Japanese economy is performing worse than expected. Excluding the impact of inflation, the RPI was at zero.
Japanese policymakers believe the economy needs continued monetary and fiscal policy support to achieve sustainable wage growth and stable 2 percent inflation. The economy posted its first contraction in three quarters in July-September, likely pushing the output gap back into negative territory.
Industrial production rose 1.0 percent on the month in October on a seasonally adjusted basis, coming in stronger than the median economist forecast of a 0.5 percent rise (forecasts ranged from a 1.5 percent drop to a 1.6 percent gain). It followed a 0.5 percent rise (revised up from a 0.2 percent gain) in September, a 0.7 percent drop 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, 10 posted increases from the previous month and five marked decreases. The increase was led by higher output of electronic parts and devices after a recent decline. Passenger cars and trucks also contributed to the overall production rise, reflecting strong sales of those vehicles. Lower production was seen in the category of iron/steel and non-ferrous metals as well as oil refineries.
Based on its survey of manufacturers, METI projected that industrial production would dip 0.3 percent on the month in November (revised up from a 2.8 percent drop forecast last month) and rebound 3.2 percent in December. Adjusting the upward bias in output plans, METI forecast production would fall a sharper 1.9 percent in November.
From a year earlier, the production index rebounded 0.9 percent in October after falling 4.4 percent each in September and August, dipping 2.3 percent in July, being flat in June and rising 4.2 percent in May. The increase was much larger than the median economist forecast of a 0.2 percent rise (forecasts ranged from a 1.3 percent drop to a 1.5 percent rise).
The index of industrial production (100 = 2020) stood at a four-month high of 104.6 in October, up from a revised 103.6 in September. 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 a second straight rise on the month in October, up 0.5 percent, as solid export demand for automobiles and information technology goods offset slower shipments of production machinery, following a 0.5 percent rise (revised up from a 0.2 percent gain) in September and two months of decline. The downside risk to the median forecast is the impact of a temporary shutdown at some of Toyota Motor's domestic factories caused by an accident at a supplier's facility, although auto output has been generally supported by improved supply chains. The global semiconductor market appears to have hit a bottom, raising hope that demand for semiconductor-producing equipment will pick up next year. From a year earlier, factory output is seen up 0.2 percent after three months of decline including a revised 4.4 percent drop in September.
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.
