Japan: Industrial activity drops at sharpest pace since May 2020 in May
July 14, 2022
Industrial output collapsed 7.5% month-on-month in seasonally-adjusted terms in May (April: -1.5% mom). The outturn marked the sharpest contraction since May 2020. Looking at the details of the release, manufacturing output dived in May, while mining output rose at a quicker pace.
On an annual basis, industrial output fell at a more moderate pace of 3.1% in May (April: -4.9% yoy). Meanwhile, annual average industrial production growth fell to 2.4% in May (April: +4.0%). This signals a worsening trend in the industrial sector.
ING’s Min Joo Kang commented on the outlook:
“Going forward, we expect a positive technical payback from the relaxation of China’s lockdown, however, the recent slowdown in the US economy is likely to create headwinds for the fourth-quarter recovery. Based on today’s data release, in addition to the weaker-than-expected consumption outcome last week, we revise down Japan’s second-quarter GDP from 0.5% quarter-on-quarter seasonally-adjusted to 0.3%, and the 2022 annual GDP from 1% year-on-year to 0.8%.”