| Consensus | Consensus Range | Actual | Previous | Revised | |
|---|---|---|---|---|---|
| Month over Month | -1.7% | -3.0% to -1.5% | -0.9% | 1.0% | 1.3% |
| Year over Year | -2.2% | -3.5% to -1.4% | -1.4% | 0.9% | 1.1% |
Highlights
Japan's industrial production posted its first drop in three months in November, down a smaller-than-expected 0.9 percent on the month, on a pullback in automobiles, auto parts and general machinery as well as lower orders for electronic and communications equipment, preliminary data released Thursday by the Ministry of Economy, Trade and Industry showed.
From a year earlier, factory output came in firmer than expected, down 1.4 percent in November, after marking its first rise in five months in October with a modest 1.1 percent gain and falling 4.4 percent in each of September and August.
The METI's survey of producers indicated that output is expected to post a solid rebound in December before dropping sharply in January.There is a downside risk to this outlook due to a shipment and production halt announced by Toyota Motor group firm Daihatsu over a vehicle safety scandal after the survey was conducted in early December.
The ministry maintained its assessment after downgrading it for the first time in eight months in August 2023 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 plus 41, above zero, which indicates the Japanese economy is performing better than expected after outperforming with a narrower margin recently. Excluding the impact of inflation, the RPI was at plus 48.
Japanese policymakers believe the economy needs continued monetary and fiscal policy support to achieve sustainable wage growth and stable 2 percent inflation, although the Bank of Japan board has been debating for an eventual lifting of negative and zero interest rate targets. The economy posted its first contraction in three quarters in July-September, pushing the output gap back into negative territory.
Industrial production slipped 0.9 percent on the month in November on a seasonally adjusted basis, coming in firmer than the median economist forecast of a 1.7 percent drop (forecasts ranged from a 3.0 percent drop to a 1.5 percent gain). It followed increases of 1.3 percent (revised up from a 0.5 percent rise) in October and 0.5 percent in September and a 0.7 percent drop in August.
Of the 15 industries, 11 posted decreases from the previous month and four marked increases. The decline was led by lower output of small passenger cars and engines after recent gains brought on by improved supply chains as well as lower orders for semiconductor and integrated circuit testers and a pullback in radars after large orders placed in the previous month. Production of general machinery (conveyers and boilers) was also down in reaction to large transactions in the prior month.
Based on its survey of manufacturers, METI projected that industrial production would rise 6.0 percent on the month in December (revised up from a 3.2 percent rebound forecast last month) and slump 7.2 percent in January. Adjusting the upward bias in output plans, METI forecast production would rise 3.2 percent in December.
From a year earlier, the production index fell 1.4 percent in November after showing a modest 1.1 percent rebound (revised up from 0.9 percent) in October and falling 4.4 percent each in September and August. The decrease was smaller than the median economist forecast of a 2.2 percent decline (forecasts ranged from 3.5 percent to 1.4 percent drops).
The seasonally adjusted index of industrial production (100 = 2020) stood at 104.0 in November, down slightly from a revised 104.9 in October. 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 came in firmer than expected, down 1.4 percent in November, after marking its first rise in five months in October with a modest 1.1 percent gain and falling 4.4 percent in each of September and August.
The METI's survey of producers indicated that output is expected to post a solid rebound in December before dropping sharply in January.There is a downside risk to this outlook due to a shipment and production halt announced by Toyota Motor group firm Daihatsu over a vehicle safety scandal after the survey was conducted in early December.
The ministry maintained its assessment after downgrading it for the first time in eight months in August 2023 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 plus 41, above zero, which indicates the Japanese economy is performing better than expected after outperforming with a narrower margin recently. Excluding the impact of inflation, the RPI was at plus 48.
Japanese policymakers believe the economy needs continued monetary and fiscal policy support to achieve sustainable wage growth and stable 2 percent inflation, although the Bank of Japan board has been debating for an eventual lifting of negative and zero interest rate targets. The economy posted its first contraction in three quarters in July-September, pushing the output gap back into negative territory.
Industrial production slipped 0.9 percent on the month in November on a seasonally adjusted basis, coming in firmer than the median economist forecast of a 1.7 percent drop (forecasts ranged from a 3.0 percent drop to a 1.5 percent gain). It followed increases of 1.3 percent (revised up from a 0.5 percent rise) in October and 0.5 percent in September and a 0.7 percent drop in August.
Of the 15 industries, 11 posted decreases from the previous month and four marked increases. The decline was led by lower output of small passenger cars and engines after recent gains brought on by improved supply chains as well as lower orders for semiconductor and integrated circuit testers and a pullback in radars after large orders placed in the previous month. Production of general machinery (conveyers and boilers) was also down in reaction to large transactions in the prior month.
Based on its survey of manufacturers, METI projected that industrial production would rise 6.0 percent on the month in December (revised up from a 3.2 percent rebound forecast last month) and slump 7.2 percent in January. Adjusting the upward bias in output plans, METI forecast production would rise 3.2 percent in December.
From a year earlier, the production index fell 1.4 percent in November after showing a modest 1.1 percent rebound (revised up from 0.9 percent) in October and falling 4.4 percent each in September and August. The decrease was smaller than the median economist forecast of a 2.2 percent decline (forecasts ranged from 3.5 percent to 1.4 percent drops).
The seasonally adjusted index of industrial production (100 = 2020) stood at 104.0 in November, down slightly from a revised 104.9 in October. 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 monthly drop in three months in November, down 1.7 percent after rising an upwardly revised 1.3 percent in October, on an expected pullback in electronic parts and devices after a solid rise in the previous month. Exports of automobiles remain solid, alleviating slower global demand for production machinery. From a year earlier, factory output is seen down 2.2 percent after a 1.1 percent rebound on three months of decline. METI is expected to maintain its assessment that industrial output is"taking one step forward and one step back."
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.
